When it comes to US currency, President Trump has two minds. He wants a strong dollar – which costs higher than other currencies – because he likes it. Prestige As a world currency for trade and transactions.
On the other hand, he also wants a weak dollar – which is lower than that – because it makes it cheaper to buy American goods abroad, which can promote manufacturing abroad.
Many things affect the strength of the currency, as the economy is growing. But a president can directly run the value of the dollar. For example, it can increase the value of foreign currency by ordering the Treasury Department to buy more. Or he can put pressure on other nations to re -value their currencies or buy more US goods by threatening to impose taxes on their imports.
Trump has the benefits of both goals, a strong dollar and a weak dollar. But he cannot get both at the same time. In today’s newsletter, I will explain the flaws and rewards of each approach.
Dollar to be weak
The United States buys more things than its sales. 78 billion dollars More, to November. Trump wants to end the trade deficit. Hopefully, by force other countries to buy more US products, they will give US manufacturing juice and generate jobs.
An obstacle is a high price dollar. “We have a big problem of currency,” he Said Last summer. “This is a huge burden on our companies.” When the dollar is stronger than any other currency, US exports are more expensive for consumers abroad.
On the contrary, when the dollar is strong, US buyers buy more imports. A bottle of Mexican wine was sold for $ 30 last year, when the dollar was weak. Since then the dollar has increased. Today, the same bottle will cost only $ 25.
To reverse the flow of goods in the country, Trump pledged to pay taxes. The latest plan is to pay 25 % tax on imports of Mexico and Canada and 10 % on Chinese imports. The goal is to buy more and more household items for Americans. (Trump also says that the country has to stop the flow of immigrants and fantasy.)
The problem with this strategy is that tariffs can strengthen the dollar. If buying a Mexican Tacla bottle suddenly becomes very expensive, the demand for this product (and everything else from Mexico) falls, which makes it weakened against the dollar.
The tariffs will also raise prices in the United States, which can indicate the Federal Reserve to raise interest rates. This means that more profit for foreign investors, which once again makes the dollar more attractive.
Trump’s tariff threats also create uncertainty, which has a stable currency and a safe place (such as the United States, which is the world’s largest economy and the best performance country) Attracts Result? Even more strong dollars.
Strengthening the dollar
The dollar as the world’s principal reserve currency makes it particularly valuable. This is the same thing that businesses, banks and people often use to cost goods and set up accounts, no matter where they are. Each country uses it for trade and transactions. This increases its price, making US exports more expensive.
Such a status, though, gives dignity and privileges. The US government, for example, borrows money by selling treasury bonds. Since the dollar is high, the United States does not have to pay so much interest. This reduces the cost of borrowing – which is a $ 36 trillion loan for the government.
Being the world’s major reserve currency also gives unique strength. Only the US banks can handle dollar transactions. This benefits Washington greatly. After the invasion of Ukraine, it prevented Russia from using dollars for business. It made Russia’s affairs with other countries very expensive and burdensome.
Washington has the additional benefit as other governments and central banks hold dollars in their store houses to trade. That is why the United States was in a position to freeze the dollars belonging to Russia’s central bank.
Trump clearly likes the dollar’s special status. When a few countries – Brazil, Russia, India, China and South Africa – recently re -created the possibility of creating a new reserve currency, Trump immediately spit a warning for everyone who could challenge.Powerful US dollars.“
The bottom line
At this time, at least, the dollar status is safe. US Treasury Bonds are unparalleled – US Treasury Bonds are unparalleled.
Trump can still take steps to weaken the dollar. The problem is that most economists think of its suggestions – such as activation of tariffs – will fire.
Lives: Carol Downer was a leader in the women’s health movement who opened the clinic, worked to teach women about their reproductive health, and promoted a technique of abortion that they felt. He used to say that it is quite safe for the general public. He died in 91.
Game
Nfl: Eagles and Chiefs are ready for the Super Bowl re -match. Kansas City defeated Buffalo 32-29 in the AFC title game. Philadelphia defeated commanders 55-23 in the NFC Championship.
Wnba: Seattle Hurricane Star Guard is sending Las Vegas Sesh to Joel Louid.
College Football: Penn State hired as a defense coordinator of Ohio State’s Jim Nools, a few days after Noel’s help to win the Buckeyes in the national championship.
Arts and Ideas
This weekend, Scotts celebrated Burns Knight, celebrating the holiday in honor of 18th -century poet Robert Burns. The center of the celebration is hogas, which is a dish of boiled sheep, oatmeal and spices. The United States banned the import of traditional hegas, some Scottish Americans were taken to the black market. A Scotland manufacturer is trying to give them a legal option.
