The U.S. dollar is undergoing its sharpest decline in over 50 years.

At the beginning of July, the U.S. dollar index, which tracks the value of the American dollar against a basket of major global currencies such as the yen and the euro, had dropped by 10–11%, marking its steepest decline in the first half of any year since 1973. Recently, the dollar bounced back slightly, down roughly 8.76% year-to-date.

Prior to President Donald Trump taking office in Jan. 2025, the dollar had reached historic highs under President Joe Biden before the decline began.

This slide has been widely attributed to President Donald Trump’s aggressive tariff policies, ongoing threats toward the Federal Reserve’s independence, and widespread uncertainty about the administration’s economic strategy.

What’s Driving the Dollar Lower?

• Tariffs and Uncertainty: New tariffs on European and other imports, announced by President Trump several months ago, have spooked investors and triggered a broad selloff of U.S. assets. The resulting lack of confidence has been compounded by concerns over ballooning deficits—particularly as significant tax cuts and higher spending increase U.S. borrowing.
• Global Reaction: As a result, global investors are shifting money out of U.S. dollar holdings, questioning the currency’s reputation as a “safe haven.” Over 55% of FX strategists surveyed by Reuters expressed concerns about the dollar’s safe haven appeal, and 70% of central banks cited concerns about the U.S. political environment discouraging dollar investments.
• Impact on Americans: A weaker dollar means imported goods become more expensive, directly impacting consumers. U.S. travelers are also getting less value for their money abroad, and investors in dollar-based assets are feeling the pinch.

A low-value dollar caught praise from Trump, though. On July 25, he told reporters, “I’m a person that likes a strong dollar, but a weak dollar makes you a hell of a lot more money,” when asked if he was concerned about the value dropping. 

“So when we have a strong dollar, one thing happened,” he continued. “It sounds good, but you don’t do any tourism. You can’t sell tractors. You can’t sell trucks. You can’t sell anything. It is good for inflation. That’s about it. And we have no inflation.”

According to the most recent Consumer Price Index (CPI) data from the U.S. Bureau of Labor Statistics, the current inflation rate in the United States is approximately 2.7% for the 12 months ending June. 

Inflation accelerated from 2.4% in May to 2.7% in June, with notable price increases in categories such as food and transportation services, while energy prices declined at a slower pace than earlier in the year. The next official update for July’s inflation figures is scheduled to be released in mid-August.