Here's a number that should grab your attention: The US dollar just dropped 10.8% in the first six months of 2025. That's the worst performance since 1973 - back when currencies first started floating freely.
If you're running finance for any company with international moving parts, this isn't just another market hiccup. This is the new reality. And here's the thing - Trump's team should be delighted with it.
The dollar's nosedive isn't some accident. Trump's advisors telegraphed this months ago. The real question? Whether your company is ready for what comes next.
Trump's Playbook: Simple but Brutal
Let me walk you through what Trump's economic team has been cooking up. It's actually pretty straightforward once you cut through the political noise.
Stephen Miran, Trump's key economic advisor, laid out the whole strategy before he even joined the administration. America's got two big weapons to fix the global trade mess:
Weapon #1: Tariffs
Hit imports with massive taxes. Fill the government's bank account. Force other countries to come crawling to the negotiating table. It's immediate, it's visible, and it works fast.
Weapon #2: Currency Warfare
Tank the dollar to make American products cheaper globally. Make imports more expensive for US consumers. It's sneaky, it's powerful, but it's risky, and way harder to pull off.
Trump went with tariffs first because they're easier to control. But here's where it gets interesting - the markets did his dirty work for him. Global investors saw the writing on the wall and sold dollars to protect their portfolios. Boom - 10% move. Currency warfare without Trump lifting a finger.
The Manufacturer’s Gift
Try asking Trump who's winning right now. US manufacturers. Every single one of them.
That 10% dollar drop just handed them a massive competitive advantage. Their production costs effectively dropped 10% compared to foreign competitors in 4 months. No process improvements. No cost-cutting programs. Just pure currency magic.
If you're competing against European or Asian manufacturers, you just got a gift. If you're buying from them... well, that's a different conversation.
Powell's $2.5 Billion Problem
So the question is, what did the smart money fear when they rushed to hedge US dollars? What happens next? Now here's where things get spicy. Trump's going after Fed Chair Jerome Powell hard. And it's not just about interest rates anymore.
Powell got caught in what looks like a pretty serious lie to Congress. The Fed's renovating their headquarters - a $2.5 billion project that's spiralled 30% over budget. When senators asked about luxury features, Powell denied everything under oath.
"No VIP dining rooms. No special elevators. No roof gardens."
Problem is, the planning documents tell a completely different story. Private dining rooms? Check. Governors' private elevator? Yep. Fancy roof terraces? Absolutely.
Federal Housing Finance Agency Director Bill Pulte is now calling for a Congressional investigation. His exact words? Powell "lied when asked about the specifics."
Harsh truth: This pressure campaign isn't accidental. If Trump wants to use currency weakness as a systematic trade tool, Fed cooperation is essential and having a new and friendly chair at the Fed is key.
Two Roads Ahead
Alright, let's cut to the chase. We're halfway through 2025 with the dollar already down 10%+. Trump loves this trend and wants it to continue. Here's how it probably plays out:
Path #1: Deal-Making Time (60% chance)
Trump strikes deals with Europe and Japan before year-end. The dollar slides another 10-15% gradually over the next 18 months. Nothing dramatic, just steady decline.
The US keeps its security partnerships with allies. They keep buying the US Treasury bonds. Everyone's reasonably happy except China, Russia, and a few others who get hit with permanent tariffs.
Inflation runs hot in the US, but the new Fed leadership accepts it. Jobs matter more than perfect price stability in Trump’s world.
Path #2: Trade War Escalation (40% chance)
Negotiations with key trade partners fail. Tariffs stay sky-high permanently. The dollar bounces initially because less trade means less demand for foreign currencies.
But then the real fun starts. As the world learns to live with “crazy” tariffs, nations decide they don't need to hold reserves in dollars anymore. They start shifting to other currencies. The dollar loses its special status as the world's go-to currency.
Wild volatility. Higher costs for US consumers. But eventually, massive advantages for American manufacturers.
Your Action Plan (No Fluff Edition)
Enough theory. Here's what you need to do right now:
Figure Out Your Breaking Point
Run the numbers on 15% more dollar weakness and 20% dollar strength. Not just revenue impact - dig into how it hits your cost structure, supplier relationships, competitive position.
Know exactly which business units scream first when currencies move. Calculate the precise FX move that kills your earnings guidance. Your board will ask, so have the answer ready.
Rethink Everything About Hedging
Traditional hedging assumes currencies bounce back to normal. Trump's multi-year agenda says that assumption is dead.
Under-hedged? Consider 18-24-month horizons instead of quarterly thinking. Over-hedged? Make sure your strategy fits this new world, not the old one.
Look for natural hedges through operations. Source locally where possible. Price regionally. Match exposures through partnerships. Sometimes operational hedges beat financial instruments.
Brace for Supply Chain Sticker Shock
Add 15-25% cost buffers to your 2026 budgets for anything sourced from countries likely to stay in Trump's crosshairs. This isn't pessimism - it's math based on announced policies.
Start hunting for alternative suppliers in "friendly" countries now. Nations that play nice with US security interests will get better trade deals.
Consider stockpiling critical inputs before Q4 negotiations wrap up. Carrying extra inventory might cost less than tariff-inflated materials later.
Get Your Cash House in Order
Keep meaningful reserves in the currencies you actually operate with. When the next shock hits, you want flexibility, not forced conversions at terrible rates.
Does your treasury setup match how your business really works? If you generate euros but hold everything in dollars, that's a problem waiting to happen.
Think about strategic investments in markets where you have big exposure. Sometimes the best FX protection is owning real assets in multiple currencies.
The Timeline That Actually Matters
Next 6 months: Watch Europe and Japan negotiations like a hawk. Dollar weakness continues either way, but the pace depends on deal progress.
Next 12-18 months: Deals get done? Expect a smooth, gradual decline. Talks blow up? Buckle up for serious volatility.
Next 2-3 years: In the trade war scenario, we're talking about fundamental reshaping of global currency relationships. Not for the faint of heart.
Real Talk: The Dollar's Stability Era is Over
While Trump's running the show, currency stability is probably dead. The companies that adapt their FX strategy, supply chains, and cash management now will crush those waiting for "clarity."
Clarity isn't coming. Preparation is everything.
The playbook exists. The scenarios are mapped out. The question is whether you'll position your company for the reality ahead or keep hoping things go back to normal.
Because the old normal just left the building.
