Breaking the Dollar: the Obstacles to Devaluation

The U.S. dollar’s strength has become a major issue for the U.S. American presidential campaign as well as for the U.S. economy, especially concerning its trade balance and industrial competitiveness. A strong dollar negatively impacts U.S. manufacturing by making exports more expensive and imports cheaper, thereby widening the trade deficit. The sharp appreciation of the dollar during the second and third quarters of 2022 is likely to result in a significant blowout of the trade deficit in the upcoming months.

There are several potential strategies to weaken the U.S. dollar, each with varying degrees of effectiveness: