The US dollar is going through a losing streak. According to Reuters, US President Donald Trump is seeking to balance trade by weakening the national currency. As a result, the greenback has once again taken a hit.
The sharp depreciation of the US dollar recorded this year is tied to the Trump administration’s efforts to eliminate the trade deficit by rebalancing the country’s current account. Experts are mulling over how risky such a policy might be and how far the US dollar might fall once these plans are implemented. Jamie McGeever, a Reuters analyst, noted: "If the United States is serious about erasing its trade deficit, then the dollar will have to weaken significantly."
Interestingly, in the past 50 years, the US has only managed to record a trade surplus once: in Q3 of 1980. The trade balance briefly hit zero in 1982 and 1991–1992. Analysts point out that these moments coincided with a slowdown in the US economy, and the situation in the early 1990s was preceded by a deficit in 1987.
"Reducing the trade deficit is a tough challenge; eliminating it without triggering a recession is a historical feat," McGeever emphasized.
He recalled that a 15% drop in the dollar during Trump’s first term failed to cut the trade deficit from 2.5%–3.0% of GDP. Likewise, the US dollar slumped by 40% over several years under George W. Bush’s presidency, yet the trade deficit remained large, the analyst added.
According to some experts, eliminating the massive US trade deficit, which reached $918 billion in 2024, may require a 20%–30% depreciation of the dollar over the next two years. Against this backdrop, McGeever believes the White House may be willing to accept a slowdown in the national economy.
