U.S. Dollar Has Its Worst Start to the Year in Five Decades

The U.S. dollar has logged its worst start to a year in over half a century, falling more than 10% in the first six months of 2025, according to reports.

Knewz.com has learned that the Dollar Index, which measures the dollar against major global currencies, including the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc, has not seen such a dramatic first-half decline since 1973, when the U.S. dollar dropped 15%.

Currency Strategist Chalks Decline Up to Trump’s Tariff War

Currency strategist Francesco Pesole attributed the dollar’s decline to President Donald Trump’s aggressive trade policies and imposition of tariffs. “The dollar has become the whipping boy of Trump 2.0’s erratic policies,” Pesole, who works for global banking company ING, said in a statement.

On April 2, President Trump introduced sweeping global tariffs in what he termed “Liberation Day,” aiming to punish nations he believes have taken advantage of U.S. trade policy. However, the rollout was chaotic. While the tariffs were initially announced across the board, Trump paused enforcement for most countries for a 90-day grace period.

Tariff Announcements Triggered Over $6 trillion in Market Losses

According to reports, this uncertainty has spooked markets, as the tariff announcements triggered over $6 trillion in market losses, reflecting investors’ fears about disrupted supply chains and retaliatory trade measures. President Trump has stated that he does not plan to extend the tariff pause further. He said during a televised interview, “We’ll look at how a country treats us — are they good, are they not so good — some countries we don’t care, we’ll just send a high number out.”

Trump’s Domestic Policies Causing Concern

In addition to trade turmoil, experts say growing concerns about the U.S. fiscal position are weighing heavily on the dollar as well. The national debt has surged past $36 trillion, according to the Treasury Department, with much of the recent acceleration tied to Trump’s expansive tax reform. Dubbed the “One, Big Beautiful Bill” by the president, the tax cuts are expected to add $3.3 trillion to the debt over the next nine years, according to estimates from the Congressional Budget Office. Investors are increasingly wary of lending to a government that appears to be expanding its deficit without a clear plan for fiscal discipline. The U.S. Treasury’s need to borrow heavily to finance these shortfalls has flooded bond markets, according to reports, contributing to downward pressure on the dollar and raising borrowing costs.

Trump Pressurizes Federal Reserve Chair

It is worth noting that President Trump has repeatedly pressured Federal Reserve Chair Jerome Powell to cut interest rates, although Powell has held firm that the central bank will not lower borrowing costs at the time being. “For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said in a statement.

It has been pointed out that although the current Federal Reserve Chair has not given in to President Trump’s demands, his term is about to end in May 2026. According to reports, traders are expecting the new chair, who will be hand-selected by the president, to deliver at least five quarter-point cuts by the end of next year.

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