Rep. Ritchie Torres, D-N.Y., took a swipe at President Donald Trump’s economic management during an interview with CNN’s “State of the Union.”
“Since Donald Trump’s inauguration, we have seen an 11% decline in the value of the dollar, the steepest decline in more than a half a century,” Torres said in the July 20 interview.
A decline of that size is broadly supported by analysis by Morningstarthe financial services research firm. We asked economists about what this development means for the U.S. and world economies; they said it is a historically unusual situation, and one that prompts some worry.
U.S. consumers are big losers when the dollar is weak. In addition to the burden of Trump’s higher tariffs on foreign goods that they purchase, consumers will face an additional factor pushing up prices because importers will have to pay more for the foreign currency to buy those products.
Americans traveling overseas will find their dollars won’t go as far. U.S. investors who own assets denominated in dollars also suffer.
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The decline of the dollar is on Trump’s mind. During a July 25 gaggle with reporters before leaving for Scotland, a reporter asked Trump about the dollar’s decline. He said, “I like a strong dollar,” but a weak dollar “makes you a hell of a lot more money.”
Trump had a point that U.S. exporters are advantaged by a weak dollar: Foreign buyers don’t have to spend as much in their own currency to acquire dollars to buy U.S.-made products. In addition, U.S. exporters will have an easier time competing against foreign products, which will be more expensive with a weak dollar. He didn’t, however, acknowledge that the exporters’ advantage is undermined if foreign countries impose higher tariffs on U.S. exports.
Explaining dollar dominance
U.S. dollars can be bought and sold for other national currencies on foreign exchange markets, with the exchange rate subject to market forces. If the dollar is strong, it takes more of a foreign currency to buy a dollar. If the dollar is weak, it takes fewer foreign currency units to buy a dollar.
For decades, the U.S. dollar has been the world’s dominant currency, reflecting the United States’ economic primacy worldwide and confidence in U.S. institutions and its legal system. The dollar has also been bolstered by “the openness, breadth and depth of U.S. financial markets — particularly the market for U.S. treasury securities, which remains by far the largest and most easily tradeable bond market in the world,” wrote Charles Collyns and Michael Klein in the online publication EconoFact.
“The world got really good at generating wealth, but not at creating vehicles for storing wealth,” Harvard University economist Oleg Itskhoki said. “Only a few countries do that, and the U.S. is the leader.”
Has the dollar fallen by 11% since Trump began his second term?
The most common way to track the dollar’s overall strength is the U.S. Dollar Indexa statistic that has been calculated for decades. It’s based on a weighted average of U.S. exchange rates with six currencies: the Euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc.
The first six months of 2025 marked the biggest decline in the dollar for that span since 1973, Morningstar reported; the dollar dropped nearly 11% against the weighted average of six currencies. The first six months of 2025 was the worst six-month decline in the dollar since the second half of 1991. (In mid-1991, the U.S. was exiting a recession, but the end of the recession wasn’t officially confirmed until the end of 1992.)
Trump was president for most of the first six months of the year, but not all of it; he took office Jan. 20. Looking just at the dollar’s decline starting Jan. 20, the drop was 9.9%.
Why does the dollar strengthen or weaken?
Historically, global uncertainty has strengthened the U.S. dollar. That’s because during times of strain, money tends to flow into the strongest, safest destination, which for decades has been the U.S. and its dollar.
“Strikingly, this rush to the safety of the dollar has happened even during times when the main source of global financial uncertainty originated within the U.S. itself — such as the 2008 global financial crisis, which was sparked by a downturn in the U.S. housing market and consequent collapse of the mortgage-backed securities market,” Collyns and Klein wrote.
That said, economists point to several factors that have historically led the U.S. dollar to soften. They include:
Economists say uncertainty, especially Trump’s pursuit of tariffs against U.S. trading partners, may be the most important factor driving the dollar’s current decline.
Trump’s threats to fire Federal Reserve Chair Jerome Powell for not lowering interest rates as fast as Trump wants is another uncertainty.
“Many foreign and domestic observers now doubt the wisdom of U.S. policymaking,” said Gary Burtless, a Brookings Institution economist.
Such concerns have exacerbated longstanding worries about high U.S. government deficits and debt, economists say.
Itskhoki said that while the currency exchange is showing the pattern most quickly, investors’ concerns about the dollar could eventually weaken their confidence in Treasury bills, U.S. corporate bonds and the U.S. stock market. Investors may be “losing faith in storing value in the U.S,” he said.
The U.S. as a nation also stands to lose if the dollar becomes less in demand around the world.
“A move away from dollar dominance would erode the considerable economic, financial and geopolitical benefits that the U.S. has gained from being the issuer of the world’s dominant currency,” Collyns and Klein wrote.
Our ruling
Torres said, “Since Donald Trump’s inauguration, we have seen an 11% decline in the value of the dollar, the steepest decline in more than a half-a-century.”
This closely tracks a calculation by Morningstar, which found that the standard metric for measuring the dollar’s strength had dropped by about 11% in the first half of 2025, the worst showing for a first half of the year since 1973.
Trump was president for most of that six-month period, but not all of it. The dollar dropped 9.9% since Jan. 20, when he took office.
The statement is accurate but needs additional context, so we rate it Mostly True.
