Trump’s policies strain dollar as US debt soars

President Trump’s economic plans are putting pressure on the U.S. dollar and making it harder for the country to manage its growing debt. His key policies, like blanket tariff increases, are unsettling trade partners and disrupting global commerce. These tariffs aim to protect American businesses but are driving investors away, weakening the dollar’s value.

Additionally, Trump’s push for large tax cuts is adding to the nation’s already massive deficits. The Senate Republicans’ recent tax proposal could increase the debt by trillions over the next decade, raising concerns about long-term financial stability. Former Treasury Secretary Lawrence Summers warned that this debt surge could weaken America’s global influence, as the U.S. becomes the world’s largest debtor.

Trump is also pressuring the Federal Reserve to lower interest rates to ease the cost of government borrowing. However, experts warn that cutting rates too quickly could fuel inflation, especially with tariffs driving up prices. This creates a tricky situation for the Fed, as higher prices and slower economic growth—described as stagflation—could hurt jobs and consumer spending.

The dollar has already dropped significantly this year, hitting its lowest level since 2023. Investors are worried about the combination of trade tensions, rising deficits, and geopolitical issues, like Trump’s early exit from the G7 summit. As these policies unfold, the U.S. economy faces risks of slower growth and higher inflation, making it tougher to finance the nation’s debt.