A weakened US currency is subtly driving up prices for everything from your monthly shopping expenses to your summer vacation.
Since President Donald Trump took office again, the dollar has dropped almost 10% vs other major currencies; this decline may contribute to Americans' worries about affordability.According to economist Thomas Savidge of the conservative American Institute for Economic Research, "it's kind of a hidden tax." "What your dollar is going to be able to buy is going to shrink."

The dollar's historic slide
In the first half of 2025, the US Dollar Index, which compares the US dollar to other major currencies, recorded its worst six-month decline in over 50 years. The dollar index is still almost 10% lower than it was at the beginning of Trump's presidency, despite the fact that the decline hasn't gotten any worse.
A strong currency can help control inflation and lower the cost of imports. A weak one can raise the cost of imported goods while increasing exports from the United States.
Even while they adopted measures that occasionally caused the dollar to decline, US presidents have traditionally expressed support for a strong dollar. According to Trump, a weak dollar benefits American business and a strong dollar hurts the US.

He stated last year that "you make a hell of a lot more money with a weaker dollar," one of several public remarks indicating his desire to see the dollar weaken.
Large corporations profit
Trump is not the only one who recognises the advantages of a weakened dollar.
Executives have been using C-suite terms like "favourable currency impact" to highlight how the decline brought tailwinds outside the US that boosted bottom lines during corporate earnings calls in recent months, with discussions about how a weaker dollar has benefited businesses from Philip Morris to Coca-Cola.During a call in February, Elie Maalouf, CEO of InterContinental Hotels, stated, "In many cases, we've got a weaker dollar, which is not unhelpful," as the firm reported increased revenues and earnings.
A declining value of the dollar can encourage sales of goods that suddenly become more affordable for large multinational corporations that conduct business abroad. However, the great majority of US companies do not conduct business internationally. It's a different story for businesses that serve domestic clients, especially if they depend on imports.
In contrast to some rivals who mostly export, Travis Madeira, a fourth-generation lobsterman who started the lobster-shipping company LobsterBoys with his brother, earns around 80% of his sales to Americans.Madeira, who is paying more to import bait and purchase Canadian lobsters, claims that "the exporters are gonna have the advantage. when it comes to the dollar weakening." "These guys are gonna have a little bit of a lever on us."
Smaller businesses suffer
The decline of the dollar can affect businesses that do operate outside of the United States. While many large corporations use currency hedging to try to protect themselves or increase sales abroad, smaller enterprises are frequently more vulnerable to the volatility.David Navazio is the CEO of Gentell, a Pennsylvania-based company that manufactures bandages and other medical products and has facilities in Brazil, Paraguay, Canada, New Zealand, and the UK. The dollar has declined in each place, raising Gentell's expenses.
In addition to other difficulties like tariffs and increases in gasoline prices due to the war, Gentell has had to boost some pricing to reflect the currency change.None of these were issues a year ago, he claims. "And it always hurts the consumer."
Other currencies increase
When travelling abroad or buying directly from an overseas vendor, American consumers are most aware of the realities of a weakening dollar.When you cross the border into Mexico, the most popular overseas destination for Americans, your dollar is worth roughly 16% less than the peso in comparison to early 2025. Other currencies, such as the Swiss franc, South African rand, Danish krone, Swedish krona, and Euro, have had declines of roughly 10% to 17%.
Although it's more difficult to measure, there is an influence on items imported into the United States. According to many economists, consumers only receive between 5% and 10% of a currency decline in developed nations like the US.
However, when prices are already impacted by other factors, they are an additional source of stress.One of the supermarket goods that has witnessed the largest price increase in the last year is coffee. The US imports the majority of its coffee from Brazil, and the value of the dollar has dropped by almost 13% in relation to the real. Even if only a small portion of the change may contribute to the skyrocketing price of coffee, currency swings can have a greater impact on emerging nations. Government data shows that coffee costs in the US have increased by over 19% in the last year.

Anticipate increased mobility.
Although the dollar's recent decline is noteworthy, currency values have fluctuated throughout the administrations of all of Trump's predecessors, dating back to the establishment of the Dollar Index in 1973 under Richard Nixon.
Although "a lot of policies that Trump is doing are something of a cancer for the dollar," according to Harvard University economist and former head economist at the International Monetary Fund Kenneth Rogoff, the dollar was bound to decline regardless of who was in power."The dollar had been on a 15-year bull run," he stated. "I would argue the dollar is still wildly overvalued, and over the next maybe five or six years, it might fall 15 per cent."
For American customers, what does that mean? Commodity prices are expected to increase, according to Rogoff, especially given the effect of the Iran war on petroleum costs."No matter what the dollar's at, they're just going to go up," he claims.