Why the U.S. Dollar Is Falling — And Why It’s No Accident

How Trump-era strategists may be using a weaker USD to pressure global currencies and supply chains

Over the past few weeks, the U.S. dollar has been sliding while other global currencies rally — and no, this isn’t just random market noise. In my view, this is part of a deliberate strategy shaped by Trump-era veterans like Scott Bessent and others. Here’s what’s really going on.

1. Making the USD Competitive Again

For years, a strong dollar has been a blessing and a curse: it attracted global capital but crushed U.S. exporters. Now, with reshoring efforts accelerating — from semiconductors to electric vehicles — the U.S. needs a more competitive dollar to make manufacturing viable at home. A softer dollar acts as a stealth subsidy, boosting American industry without the political cost of passing new laws.

2. Stress-Testing Global Supply Chain Currencies

This is where it gets more interesting. Many countries — Germany, Japan, Korea, Taiwan, Switzerland — have built their economies as high-efficiency export machines selling into the U.S. market. But a weaker dollar turns the tables:

• Export margins get squeezed: A stronger euro, yen, won, or Swiss franc cuts into profits and weakens competitiveness.

• Supply chains get tested: Can these economies handle currency swings without breaking their export models?

• Capital flows reverse: As the dollar weakens, capital often flows out of emerging markets and into U.S. or riskier assets, putting additional strain on vulnerable economies.

• Strategic leverage: The U.S. gains insight into who can withstand pressure — and who might fold in future trade negotiations.

Countries in the Danger Zone

Here’s who’s most exposed, with echoes of the 1992 ERM crisis when the Bank of England was forced to depeg:

• Eurozone (Germany, Netherlands, Scandinavia): A stronger euro risks splitting the bloc between northern surplus countries and weaker southern economies.

• Japan: A sudden yen rebound could hammer exporters; the Bank of Japan is already on high alert.

• Korea and Taiwan: Heavy dependence on exports to the U.S. makes them vulnerable to currency swings.

• Switzerland: The franc’s safe-haven status could trigger destabilizing upward pressure, much like the pound faced in the ERM era.

Much like the U.K. in 1992, these economies now face a brutal choice: intervene and burn reserves, or let their currencies surge and risk wrecking exports.

So What? Why This Matters

This isn’t about the dollar losing reserve status — it’s about the U.S. reengineering global power dynamics. By letting the dollar weaken, Washington is rewiring the post-pandemic world order, testing supply chains, and reshaping leverage with allies and rivals alike.

For markets, this isn’t just a currency story — it’s a stress test of the global system.

Disclaimer

This post reflects the author’s personal views and market opinions. It is not financial advice or a recommendation to buy, sell, or hold any currency or security. Always do your own research or consult a professional before making investment decisions.