A subtle but powerful force is quietly inflating costs across everyday life—from summer travel plans to weekly grocery runs: the declining value of the U.S. dollar.
Since President Donald Trump's return to the White House, the dollar has depreciated roughly 10% against major global currencies. This shift, while often overlooked in headlines, is increasingly factoring into Americans' growing anxieties about affordability.
"It's kind of a hidden tax," says economist Thomas Savidge of the American Institute for Economic Research. "What your dollar is going to be able to buy is going to shrink."
Here's what's happening with the dollar—and what it means for your wallet.
A Historic Decline
The U.S. Dollar Index—which tracks the greenback against a basket of major currencies—recorded its steepest six-month drop in over 50 years during the first half of 2025. While the decline has since stabilized, the index remains approximately 10% below its level at the start of Trump's current term.
A strong dollar typically makes imports cheaper and helps contain inflation. Conversely, a weaker dollar tends to raise prices on foreign goods while making American exports more competitive abroad.
Historically, U.S. presidents have publicly endorsed a strong dollar—even when their policies inadvertently weakened it. Trump, however, has broken with that tradition, arguing that a robust dollar disadvantages U.S. industry and that a softer currency benefits American manufacturers.
"You make a hell of a lot more money with a weaker dollar," he remarked last year—one of several candid statements signaling his preference for a declining dollar.
Big Multinationals Reap Benefits
Trump isn't alone in seeing upside to a weaker buck. In recent earnings calls, executives from Philip Morris to Coca-Cola have highlighted "favorable currency impacts," noting how the dollar's dip boosted overseas revenues and strengthened bottom lines.
"In many cases, we've got a weaker dollar, which is not unhelpful," said Elie Maalouf, CEO of InterContinental Hotels, during a February call announcing higher profits.
For large multinational corporations with significant overseas operations, a weaker dollar can stimulate foreign sales by making U.S.-priced goods relatively cheaper abroad. But the vast majority of American businesses operate primarily within domestic borders—and for them, especially those reliant on imported goods, the story is very different.
Take Travis Madeira, a fourth-generation lobsterman who co-founded LobsterBoys with his brother. Roughly 80% of his sales go to U.S. customers, unlike competitors who focus on exports.
"The exporters are gonna have the advantage when it comes to the dollar weakening," Madeira says. He's now paying more to import bait and source Canadian lobsters. "These guys are gonna have a little bit of a lever on us."
Smaller Businesses Bear the Brunt
Even companies with international footprints aren't immune. While large corporations often hedge currency exposure or shift sales strategies to mitigate volatility, smaller businesses typically lack those buffers.
David Navazio, CEO of Gentell—a Pennsylvania-based manufacturer of bandages and medical supplies—operates facilities in Brazil, Paraguay, Canada, New Zealand, and the United Kingdom. In each location, the dollar's decline has increased operational costs.
Gentell has responded by raising select prices, compounding pressures from tariffs and war-driven fuel spikes.
"A year ago, none of these were concerns," Navazio says. "And it always hurts the consumer."
What Consumers Feel Most
For everyday Americans, the dollar's weakening is most tangible during international travel or when purchasing directly from foreign retailers.
Cross into Mexico—the top overseas destination for U.S. travelers—and the dollar now buys about 16% less in pesos than it did in early 2025. Similar declines of 10% to 17% have been recorded against the Swiss franc, South African rand, Danish krone, Swedish krona, and the euro.
When it comes to imported goods, the impact is more muted but still present. Economists estimate that in advanced economies like the U.S., only about 5% to 10% of a currency depreciation typically filters through to consumer prices. Still, these incremental increases add stress atop existing inflationary pressures.
Consider coffee, one of the grocery items with the sharpest price jumps over the past year. Brazil supplies the largest share of U.S. coffee imports, and the dollar has fallen roughly 13% against the Brazilian real. While only a fraction of that currency shift may directly affect retail coffee prices, every uptick compounds. According to federal data, U.S. coffee prices have risen nearly 19% over the past year.
Looking Ahead: More Volatility Likely
Currency markets are inherently fluid. While the dollar's recent slide is notable, it has dipped to lower levels during each of Trump's predecessors' administrations—and at multiple points since the Dollar Index's inception in 1973 under Richard Nixon.
Kenneth Rogoff, a Harvard economist and former IMF chief economist, argues that while "a lot of policies that Trump is doing are something of a cancer for the dollar," the currency was likely destined to soften regardless of who occupied the Oval Office.
"The dollar had been on a 15-year bull run," Rogoff says. "I would argue the dollar is still wildly overvalued, and over the next maybe five or six years, it might fall 15%."
For American consumers, the implication is straightforward: commodity prices—especially energy—are likely to rise further, particularly amid ongoing geopolitical tensions affecting oil markets.
"They're just going to go up," Rogoff says, "no matter what the dollar's at."
🚨 Is 4% the new 2%? 🚨
Inflation is hitting harder than expected, and the "3% era" might already be behind us. According to the latest data and analysis from Jamie McGeever, U.S. inflation is on a fast track toward 4%—and the red flags are everywhere.
Here’s the breakdown of what’s happening:
📈 The Numbers are Spiking
Headline PCE hit 3.5% in March, the highest in nearly three years.
Real-time projections suggest headline CPI could reach an eye-popping 6.1%.
Gas prices are up nearly 50% since the start of the Iran war, averaging around $4.45/gallon.
⛽ The "Strait of Hormuz" Effect.
With the closure of the Strait of Hormuz, energy costs—from gasoline to jet fuel—are skyrocketing. While the Fed hopes this won't "bleed" into core inflation (the price of everyday goods and services), analysts are skeptical.
🏛️ A New Era at the Fed?
Incoming Fed Chair Kevin Warsh is facing a "baptism of fire." He’s proposed shifting the Fed's focus to "trimmed mean" inflation metrics, which currently look lower (around 2.3%–2.9%). But with standard CPI flashing red, convincing the public—and his colleagues—that things are "under control" will be a massive uphill battle.
The Bottom Line: If oil stays around $100 a barrel, 4% inflation isn't just a risk—it's the likely reality. As Bob Elliott (Unlimited CEO) puts it: "When you come into an inflation shock with inflation already elevated, the [chances] it's transitory are much lower."
What are you seeing at the pump and the grocery store? Is it time for the Fed to rethink the 2% goal entirely? 👇
