The dollar has risen to its strongest level in 18 months against major peers, clashing with the Trump administration’s goal of boosting manufacturing and exports. The US trade deficit could widen to 4% of GDP next year, while households face elevated inflation and falling real wages.
A surging dollar is exposing a contradiction in President Donald Trump’s economic agenda ahead of the November 3 midterm elections. The stronger currency makes US exports less competitive and imports cheaper, at odds with the administration’s efforts to revive manufacturing and shrink the trade deficit.
US imports have reached record levels, driven largely by purchases of chips, equipment and other goods for the AI build-out. The trade deficit was 2.7% of gross domestic product earlier this year and could reach 4% next year, Dean Maki of Point72 estimates. The dollar has strengthened as investors weigh debt and deficit concerns in other developed economies, including France and Japan, and as global capital flows toward US AI.
The administration’s policy framework, associated with the proposed “Mar-a-Lago Accord,” seeks a weaker dollar, but the article argues that lasting currency changes have historically required coordinated international action. Tariffs have raised the cost of imported goods, while the US war with Iran has driven energy costs higher; inflation remains elevated and real wages are falling. The article says targeted interventions may continue, but their lasting impact is uncertain.
