“Tariffs implemented by Donald Trump will strengthen the US dollar.”

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. There are many studies showing this... 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.

Studies examining market reactions to tariff announcements show currency depreciation effects following tariff implementation, with implications for import pricing and trade flows.

PWBM projects Trump's tariffs (April 8, 2025) will reduce long-run GDP by about 6% and wages by 5%. A middle-income household faces a $22K lifetime loss. These losses are twice as large as a revenue-equivalent corporate tax increase from 21% to 36%, an otherwise highly distorting tax.

PWBM projects Trump's tariffs (April 8, 2025) will reduce long-run GDP by about 6% and wages by 5%. A middle-income household faces a $22K lifetime loss... A reduction in imported goods means foreign businesses and governments will purchase fewer U.S. assets, including U.S. federal government bonds. U.S. households will need to increase their future take-up of government bonds and will subsequently decrease their savings into productive capital.

The U.S. average effective tariff rate climbed to nearly 17%, the highest since the early 1930s. Research from the Federal Reserve Bank of New York found that nearly 90% of those costs were borne by American firms and consumers.

Tariffs and trade policy uncertainty could have a negative impact on U.S. and global GDP through 2026. ... Following the invalidation of IEEPA tariffs, President Trump has invoked a law known as Section 122. This section of the 1974 Trade Act allows the President to impose tariffs not exceeding 15% for a maximum of 150 days on all countries, in order to address balance-of-payments needs or to prevent a significant depreciation of the dollar.

The U.S. dollar has fallen around 10% on a broad, trade-weighted basis since the start of President Trump's second term. This fall has come in short, sharp bursts that have been very unnerving. The first of these was in April 2025 in the wake of the chaotic rollout of reciprocal tariffs.

The Federal Reserve Bank of New York published an analysis in February that found over 90% of Mr. Trump's 2025 tariffs were passed onto U.S. consumers and businesses in the form of higher costs. It found that from January through August of last year, U.S. importers bore 94% of tariff costs.

Based on this, the dollar should have appreciated by about 5%. Instead, its value fell by more than 3% over the next 10 days. This surprising disconnect suggests that international investors are losing confidence in the safety of dollar-denominated assets, and the dollar itself, says Krishnamurthy, a senior fellow at the Stanford Institute for Economic Policy Research.

The Trump administration's trade policy—specifically its broad, aggressive use of tariffs—has several direct economic costs and benefits: higher inflation, an effective tax on consumers and businesses, and increased government revenue. ... Yields influence the dollar's value against other currencies.

Comprehensive tracking of Trump tariff announcements and implementation, documenting tariff rates and policy changes throughout 2025-2026.

One of the effects of the tariffs is going to be over the medium term to strengthen the American dollar because Americans will need less foreign exchange in order to import, and when the dollar gets stronger, this affects all American exporters, whether they are exporting goods or whether they are exporting services.

The US dollar initially depreciated and between April 2 and May 10, it had depreciated by 5 percent relative to most major currencies. The results of the tariff simulations alone imply that the dollar should appreciate.

In 2025, the Trump tariffs amounted to an average tax increase per US household of $1,000. After the IEEPA tariffs were struck down, we estimate the President's remaining new tariffs under Section 232 will increase taxes per US household by $400 in 2026.

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 and $400 for households at the bottom of the income distribution.

A country that implements tariffs can indeed sometimes expect the value of its currency to increase. 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.

In the meantime, investors continued to assess last Friday's SCOTUS ruling against President Trump's global tariffs and its potential impact on inflation and the real economy. ... The US Dollar's (USD) upward momentum from the previous week seems to have encountered a tough nut to crack in the 98.00 region, as measured by the US Dollar Index (DXY).

when we buy fewer imports... we reduce the supply of US dollars. and demand for foreign currency. and that has the effect of causing the US dollar to appreciate. so tariffs cause the dollar to become more expensive.

Contrary to US government rhetoric, the cost of US import tariffs are not borne by foreign exporters. Instead, they hit the American economy itself. Importers and consumers in the US bear 96 percent of the tariff burden, according to new research from the Kiel Institute for the World Economy.

Economic theory suggests tariffs typically lead to currency depreciation rather than appreciation in the medium to long term. Tariffs reduce imports and capital inflows, decreasing demand for the domestic currency. Additionally, tariffs reduce economic growth and productivity, which typically weakens currency valuations relative to trading partners.

On Friday, the US Supreme Court ruled against the legality of those of Trump's tariffs that were based on IEEPA (International Economic Emergency Powers Act of 1977). This triggered an immediate, if restrained slide in the US dollar on the notion that this would be bad for US fiscal stability as the treasury would have to repay the tariffs collected and wouldn't enjoy future revenue from these tariffs.