“Donald Trump's tariff policies will cause the US dollar to collapse.”

The first thing to note is that the foreign exporters did not experience currency depreciation following the 2025 U.S. tariffs. Instead, it was the U.S. dollar that depreciated. ... In supplemental analysis, where we explicitly include the exchange rate in the analysis, we find that the dollar depreciation increased U.S. import prices by a small amount. Importantly, we find that taking account of exchange rate movements does not affect our conclusions on the pass-through from tariffs to import prices.

The U.S. dollar actually depreciated (not appreciated) following the 2025 tariffs, which means foreign exporters didn’t get bailed out by currency movements. They also confirmed they controlled for exchange rates through country-time fixed effects and ran supplementary analysis explicitly including exchange rates — the conclusions held.

A decline in demand for foreign goods induced by import tariffs lowers the demand for foreign currency and leads to an appreciation of the domestic currency. Such valuation effects are quantitatively large. Our quantification suggests that the optimal US import tariff is nearly five times smaller when the US foreign asset position is taken into account, declining from 34% to 7%.

Fiscal Effects: All tariffs to date as of February 2026 are projected to raise about $1.2 trillion over 2026-35, though slower economic growth ... Under TBL’s assumptions about macroeconomic effects and Federal Reserve responses, the price level will rise by 0.6% in the short run, representing a loss of about $800 for the average household.

The IMF expressed concern in the report about the shock waves unleashed in financial markets by Trump's trade policies – and said worse may be to come. In particular, it points to the risk of “strong volatility” in currency markets, which “may be difficult to navigate, especially for emerging market economies”.

The US dollar's weakness against its major peers during the first quarter of 2025 is anticipated by Goldman Sachs Research to persist. Over the next 12 months, the US currency is forecast to fall about 10% versus the euro, and around 9% against the Japanese yen and British pound (as of April 8).

Turmoil around sweeping US tariffs risks undercutting what's otherwise a “buoyant” economy, the International Monetary Fund (IMF) said. “Uncertainty around trade policies could represent a larger-than-expected drag on activity,” the Washington-based Fund said on Wednesday (Feb 25) in a summary of its latest annual review of the world's biggest economy.

US real GDP growth is -0.5pp lower in 2025 from the April 2nd announcement and -0.9pp lower from all 2025 tariffs. In the long-run, the US economy is persistently -0.4 and -0.6% smaller respectively. No mention of dollar collapse; focuses on GDP reduction and price increases.

The situation surrounding U.S. tariffs is constantly evolving. Read the latest analysis of their economic impact from J.P. Morgan Global Research. (Analysis indicates tariffs lead to higher costs and slower growth but no dollar collapse projected.)

Tariff uncertainty casts shadow over robust US economy. A barrage of policy announcements from Washington risks disrupting the robust fundamentals and animal spirits of the US economy.

Tariffs surprised to the upside, yet the dollar has slumped. It is now down around 10 percent against the G10 currencies (less against most emerging economies). Some now believe that the dollar has hit a long-term turning point.

The consensus view at the time was that the dollar would stay strong as tariffs took their toll on the currencies of US trading partners.

direct effect of tariffs uh an import tariff should be uh an appreciation or at least upward pressure on the value of your currency and that would also push exports down ... Sometimes economists would say, well, because tariffs will make imports more expensive relative to, let's say, domestic goods, you might expect less imports. But two things that you typically would expect to see happening in response might also bring down exports leaving the net of imports and

The study identifies two key phases: a short-lived USD appreciation driven by initial market optimism, followed by a sharp depreciation due to retaliatory tariffs, heightened uncertainty, and rising risk premiums.

Based on their models, they conclude that Trump's tariffs may have pushed investors to question the dollar's future. And they note that this skepticism could reflect less willingness to let the U.S. government to borrow cheaply in the future. ... Instead, its value fell by more than 3% over the next 10 days.

The announcement of new tariffs has triggered significant movement in forex trading markets, with the US dollar (USD) strengthening as investors seek safe-haven assets. Market uncertainty typically benefits the dollar, as global investors move capital into US assets during periods of heightened risk.

George Saravelos, global head of FX research at Deutsche Bank, believes that the dollar will weaken further but at a slower rate than it did last year. “We project further dollar weakness but at a slower pace than 2025, leaving the trade-weighted dollar 10% weaker by end-26.”

The Tax Foundation estimated tariffs added about $1,000 to household costs in 2025 and as much as $1,300 in 2026. ... Research from the Federal Reserve Bank of New York found that nearly 90% of those costs were borne by American firms and consumers.

An IMF study of 151 countries between 1963 and 2014 showed that tariff increases resulted in real exchange rate appreciation, but only mild impacts on trade balance. This empirical result is what economic theory would predict, on average. But it is only sometimes true, not always.

The US Dollar hasn’t taken well the tariff-related mess seen over the weekend. Renewed uncertainty over US President Donald Trump's trade policies led to a modest USD pullback. There is now a clear risk that investors reactivate the so-called “Sell America” trade – and that’s not good for the US Dollar in the short-to-medium term.

Standard economic theory predicts that import tariffs reduce demand for foreign currency (as imports decline), leading to appreciation of the domestic currency like the US dollar, not collapse. Historical evidence from Trump's 2018-2019 tariffs showed temporary dollar strength amid volatility, not collapse.

Is the U.S. dollar on the brink of collapse? ... Tariff policy has created risk about the status of trade with the USA. Donald Trump believes that a weaker US currency would favor the development of US manufacturing sector.

Last Friday, the Supreme Court ruled that Trump did not have the authority to enact tariffs under the International Emergency Economic Powers Act. (Discusses legal limits on tariffs but notes short-term market volatility without predicting dollar collapse.)