Podcast Summary: The Dollar Is Weaker. Is That a Good Thing?
Podcast: The Journal.
Hosts: Jessica Mendoza, Ryan Knutson
Guests: Greg Ip (WSJ Chief Economics Commentator), U.S. President Donald Trump (audio), Treasury Secretary Scott Besant (audio)
Release Date: February 3, 2026
Overview
This episode explores the recent decline in the U.S. dollar's value and what it means for the U.S. economy, global markets, and everyday Americans. With perspective from WSJ Chief Economics Commentator Greg Ip, the show investigates the drivers behind the dollar’s weakness—ranging from tariffs to unconventional foreign policy to pressure on the Federal Reserve—under President Donald Trump’s administration. The hosts also discuss the trade-offs of a weaker currency, the implications for global finance, and whether a weaker dollar signals a broader shift in America’s economic priorities.
Key Discussion Points & Insights
The Dominance and Expectations of the U.S. Dollar
- (00:05–01:03)
- The U.S. dollar has long been the world's premier currency, functioning like a default language in global business.
- Greg Ip: “Why does everybody speak English in a business meeting overseas? Because everybody else speaks English, right?” (00:18)
- A strong dollar is historically seen as a vote of confidence in the U.S. economy.
- Greg Ip: “It was a gesture of confidence in the United States. It was kind of like a report card.” (01:03)
- The U.S. dollar has long been the world's premier currency, functioning like a default language in global business.
Recent Downturn in the Dollar
- (01:19–01:41)
- Over the past year, especially in recent weeks, the dollar has dropped significantly, sparking concern among economists but not President Trump.
- Donald Trump: “No, I think it’s great. I mean, the value of the dollar, look at the business we’re doing.” (01:45)
- Over the past year, especially in recent weeks, the dollar has dropped significantly, sparking concern among economists but not President Trump.
What Does “Weak Dollar” Actually Mean?
- (04:13–04:28)
- A “weak dollar” means the exchange rate of the U.S. dollar has fallen against other major currencies (yen, euro, CAD).
- Greg Ip: “That’s all we mean by a weak dollar.” (04:17)
- The strength or weakness of a currency is driven by interest rates, economic conditions, policy actions, and sometimes just investor sentiment (“vibes”). (04:35)
- A “weak dollar” means the exchange rate of the U.S. dollar has fallen against other major currencies (yen, euro, CAD).
The Dollar’s Unique Role & U.S. Responsibility
- (05:06–05:51)
- As the global reserve currency, the dollar bears unique responsibility—market stability depends on faith in the dollar.
- Greg Ip: “...the US as the strongest economy in the world and as the issuer of the reserve currency... has a certain responsibility...” (05:29)
- Past presidents have aligned with the “strong dollar” policy as a signal of stability and leadership.
- As the global reserve currency, the dollar bears unique responsibility—market stability depends on faith in the dollar.
How Trump Has Broken with Precedent
1. Tariffs and Trade Disruption
- (07:01–08:06)
- Imposed highest tariffs in a century, prioritizing “buy American” at the expense of global norms.
- Greg Ip: “By imposing tariffs... he’s kind of shocked the rest of the world.” (07:32)
- Donald Trump: “If you want your tariff rate to be zero, then you build your product right here in America.” (07:19)
- Imposed highest tariffs in a century, prioritizing “buy American” at the expense of global norms.
2. Foreign Policy & Market Uncertainty
- (08:06–08:34)
- Moves like proposing to annex Greenland (a Danish and EU territory) undermine trust and create uncertainty.
- Donald Trump: “We are going to do something on Greenland. Whether they like it or not, Denmark.” (08:20)
- Greg Ip: “The idea that the United States would forcibly seize territory from an ally was unheard of.” (08:25)
- Moves like proposing to annex Greenland (a Danish and EU territory) undermine trust and create uncertainty.
3. Interfering with the Federal Reserve
- (08:49–09:10)
- Trump has pressured the Fed to lower interest rates, challenging its independence.
- Donald Trump: “Interest rates can go down because our country becomes stronger... should go down, not up.” (08:49)
- Greg Ip: “If you see that the President is trying to weaken its independence, sure, that is absolutely a reason why you might be... reluctant to own dollars.” (09:10)
- Trump has pressured the Fed to lower interest rates, challenging its independence.
Impact:
- The confluence of tariffs, geopolitical tension, and Fed interference sows market uncertainty, undermining faith in the dollar.
Trump’s Case for a Weaker Dollar
- (10:00–10:53)
- Trump has openly supported a weaker dollar—he believes a strong dollar hurts exports and domestic manufacturing.
- Donald Trump (2017): “I think our dollar is getting too strong... that will hurt ultimately.” (10:26)
- Greg Ip: “He doesn’t mind having a weaker dollar.” (10:44)
- Trump has openly supported a weaker dollar—he believes a strong dollar hurts exports and domestic manufacturing.
The Japan Example & International Market Interventions
- (11:28–12:59)
- The U.S. has hinted at working with Japan to stabilize the yen (and thus the dollar), an unusual step.
- Scott Besant: “I am assured that they [Japan] will take measures to stabilize that market.” (11:28)
- Greg Ip: “It was kind of like the body language, wow, these guys kind of want the dollar to be lower...” (12:59)
- A weaker dollar relative to the yen helps reduce America’s trade deficit with Japan, supporting Trump’s goal of reshorng manufacturing.
- The U.S. has hinted at working with Japan to stabilize the yen (and thus the dollar), an unusual step.
America First vs. Global Stewardship
- (13:11–14:44)
- Trump’s focus: prioritize domestic trade over global “rules-based order.”
- Greg Ip: “He wants to reshore manufacturing, and he sees a strong dollar as being an obstacle to that.” (13:18)
- Greg Ip: “He only sees the US as having responsibility to itself.” (14:44)
- Trump’s focus: prioritize domestic trade over global “rules-based order.”
Upsides and Downsides of a Weak Dollar
Benefits
- Boosts Exports: Makes U.S. goods cheaper abroad, potentially supporting domestic jobs.
- Reduces Trade Deficits: Stronger foreign currencies make American products more competitive globally.
Costs
- Imported Goods Get Pricier
- Greg Ip: “Some imported goods are going to cost a bit more...” (15:14)
- Commodities Priced in Dollars Spike (Oil, Gold, etc.)
- Greg Ip: “When the dollar goes down, those commodity prices go up... gold up, oil up, copper up.” (15:28–15:47)
- Inflation Risks: Increased import costs can fuel inflation domestically.
- Investor Confidence Wanes: Foreign investors may view U.S. bonds as less attractive, pushing up interest rates.
- Greg Ip: “The United States might have to pay higher interest rates...” (16:41)
- Greg Ip: “Risk free bonds not being so risk free anymore.” (17:20)
- E.g., Instead of paying 4% on treasury bonds, the U.S. might have to pay 4.1−4.2% (17:20)
Is the Dollar’s Global Dominance at Risk?
- (17:32–18:16)
- Greg Ip: “People say that and I just don’t buy it.” (17:37)
- The dollar is still “the best-looking horse in the glue factory.” (17:58)
- No clear alternative exists (Chinese renminbi has issues, other currencies have less trust/liquidity).
- Short-term: Dollar value may fall, but its central role as the world’s key currency is secure for now.
- Greg Ip: “People say that and I just don’t buy it.” (17:37)
Notable Quotes & Memorable Moments
- On why the dollar is so entrenched:
- “It’s kind of like, why does everybody speak English in a business meeting overseas? Because everybody else speaks English, right?”
— Greg Ip (00:18)
- “It’s kind of like, why does everybody speak English in a business meeting overseas? Because everybody else speaks English, right?”
- A shift in rhetoric:
- “I was elected President of the United States, not President of the world.”
— Greg Ip, paraphrasing Trump’s stance (01:57)
- “I was elected President of the United States, not President of the world.”
- On Trump’s tariffs:
- “But here is the United States… Breaking the rules by hitting everybody with tariffs, saying, we’re now only looking after our industries first.”
— Greg Ip (07:32)
- “But here is the United States… Breaking the rules by hitting everybody with tariffs, saying, we’re now only looking after our industries first.”
- On intervention rumors:
- “It was sort of a sign…these guys kind of want the dollar to be lower, or at least they don’t mind if it goes lower.”
— Greg Ip (12:59)
- “It was sort of a sign…these guys kind of want the dollar to be lower, or at least they don’t mind if it goes lower.”
- On U.S. dollar dominance:
- “The best-looking horse in the glue factory. That’s kind of the U.S. dollar.”
— Greg Ip (17:58)
- “The best-looking horse in the glue factory. That’s kind of the U.S. dollar.”
- Summing up the risk:
- “Risk-free bonds not being so risk-free anymore.”
— Jessica Mendoza (17:16)
- “Risk-free bonds not being so risk-free anymore.”
Timestamps for Crucial Segments
- 00:05–01:03: History and dominance of the U.S. dollar
- 01:19–01:45: The dollar's recent decline and Trump’s reaction
- 04:13–05:06: What a weak dollar means and how values are set
- 07:01–08:06: The impact of Trump’s tariffs
- 08:49–09:10: Trump’s pressure on the Federal Reserve
- 10:26: Trump’s 2017 remarks on the dollar being “too strong”
- 11:28–12:59: U.S. discussions with Japan on stabilizing the yen
- 13:11–14:44: America First vs. global stewardship of the dollar
- 15:14–17:32: How a weaker dollar affects imports, commodities, and investment
- 17:32–18:16: Is the era of the dollar coming to an end?
- 17:58: The “best-looking horse in the glue factory” analogy
Conclusion
The episode paints a nuanced picture: President Trump’s policies and rhetoric mark a deliberate shift from previous administrations, embracing a weaker dollar to support an “America First” agenda and reduce trade deficits, even at the expense of global financial norms and some domestic risk. While there are tangible benefits for exporters and domestic manufacturers, downsides include higher import costs, increased commodity prices, and potentially higher borrowing costs for the country. Despite recent turbulence, experts like Greg Ip see no imminent end to the dollar’s dominance—at least until a credible alternative emerges.