Weak Dollar, Strong Play: How Trump’s Tariffs Open a Backdoor for Savvy Investors

What Happened

The first quarter of 2025 has brought a surprising twist to the markets: a sharp decline in the U.S. dollar.

While many expected the tariffs under President Trump to strengthen the dollar by curbing imports, so far they have had the opposite effect.

The ICE U.S. Dollar Index, which is used to measure the dollar's strength against a cluster of other fiat currencies, fell nearly 4% over the first quarter of the year.

Analysts have pointed to rising inflationary pressure caused by the tariffs, as well as an uncertain outlook on U.S. growth as the key drivers of the dollar's unforeseen slide.

Despite the efforts of some companies, many are being forced to pass the cost of the tariffs onto consumers, prices are slowly ticking upwards, and the Federal Reserve is in a bind over whether it should tighten or loosen monetary policy.

Add in the political turbulency and uncertainty over the past few months as well as rising tensions with key trading partners. With all that, investors have suddenly found themselves navigating an economic landscape with a weaker currency.

Why It Matters

A dollar in decline shifts the entire financial chessboard. For years, a strong dollar narrative has dominated strategies for investors focused on U.S. assets. But as the U.S. dollar loses its footing, the winners and losers are changing.

First, companies that generate significant revenue overseas such as Microsoft, Alphabet, and Meta stand to benefit. When foreign sales are converted back into dollars, a weaker dollar inflates the final number, giving earnings a boost.

Société Générale even created a 'peak-dollar' investment basket to highlight firms well-positioned to capitalize on this trend. According to their estimates, these companies could see a 6–7% earnings lift from the currency shift alone.

Second, the commodities market is looking increasingly more attractive. Since goods like oil, gold, and copper are priced in dollars, they tend to rise when the dollar falls. That makes commodity-focused stocks or ETFs — especially those tied to energy or metals — a solid hedge.

Finally, foreign markets have become more appealing.

A weaker dollar makes international assets relatively cheaper and increases the value of foreign gains when converted back into U.S. currency. ETFs tracking emerging markets or European indexes could be smart long-term plays if the dollar continues to slide.

How It Affects You

For the astute investor, this moment presents an unusual but potent opportunity. Instead of seeing tariffs as only a drag on the economy, they can reframe the situation: macroeconomic chaos often creates profit potential for those paying attention.

Start by looking at your current holdings. Do they include U.S.-based companies with large global footprints? If not, consider rebalancing. Stocks like Morgan Stanley and other members of the 'peak-dollar' basket are worth researching.

Also, think on a global scale. International ETFs and mutual funds may benefit from dollar weakness, as might companies listed abroad that have strong fundamentals. The same goes for commodity exposure — especially in inflation-sensitive sectors like energy and materials.

Even forex markets might come into play for more advanced investors. Betting against the dollar or diversifying into stronger currencies like the euro or yen could help hedge other portfolio risks.

While Trump’s tariffs have jolted the dollar in an unexpected direction, that doesn’t mean investors need to sit on their hands. With the right moves, this currency shake-up can be an opportunity to make money instead of losing it.