A Day After Mnuchin’s ‘War on the Dollar,’ Trump Says Dollar Will Get ‘Stronger and Stronger’

donald trump
AP/Michael Probst

The reactions to the Trump administration’s comments on the U.S. dollar are becoming comical.

President Donald Trump told CNBC on Thursday that the dollar will strengthen over time under his leadership, which was interpreted as contradicting Treasury Secretary Steven Mnuchin’s Wednesday comments that seemed to welcome a weakening of the currency.

“The dollar is going to get stronger and stronger, and ultimately I want to see a strong dollar,” Trump said in a CNBC interview. “Our country is becoming so economically strong again and strong in other ways too.”

The dollar promptly shot upward against other currencies, reversing the decline from earlier in the day.

These comments, however, only seem to contradict each other if viewed in a vacuum, without reference to the economic realities.

Trump’s tax and regulatory policies are already strengthening the U.S. economy. That will push up the value of the dollar against other currencies, which slows down the acceleration and pushes some of the prosperity created by Trump administration policies out to the rest of the world.

So what Mnuchin has been doing is trying to talk down the dollar from appreciating too fast, hoping to hold off the braking effect of foreign exchange shifts and keep more of the prosperity in the U.S.

Ultimately, of course, Trump is right that a stronger U.S. economy will likely push up the dollar. No amount of “talking down” the dollar will stop that. But the foreign exchange adjustment may be able to be slowed down if currency traders think the U.S. will welcome a weaker dollar in the short term.

 

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