Donald Trump wants to weaken the US dollar: Can he?

livemint.com:

Unless US President Joe Biden lets another Democrat contest this year’s election, Republican candidate Donald Trump seems all but sure to win the White House. It’s not just opinion polls. Consider the contrast in optics: A visibly ageing Biden who looked stumped at a key debate versus a fist-pumping Trump who arose unshaken from the snick of an assassin’s bullet.

In the ‘home of the brave and land of the free,’ as the US styles itself, it’s clearly advantage Trump right now. His campaign to “Make America Great Again" has an economic aspect that the rest of us cannot ignore. Its global impact, after all, is likely to be far greater in magnitude than magnanimity.

Most strikingly, he wants a tariff of 10% on all imports and a duty of 60% on Chinese shipments. Plus, to boost American exports and shrink the US trade gap with other countries, Trump has said he wants to weaken the dollar, which would make US-made stuff cheaper in export markets. This idea is less scandalous than his rejection of free trade, but also less feasible.

So long as the American dollar remains the world’s chief reserve currency, weakening it may prove to be a mug’s game. Nonetheless, what options would a Trump administration have? On paper, a sure-shot way to diminish a currency’s value is to debase it through oversupply. Ever since America unpegged its dollar from gold in 1971, it has had ample space for that.

But then, with world trade conducted largely in dollars, global demand for the greenback has held up against great gluts of supply. We saw this most vividly during the covid pandemic, when the US Federal Reserve opened a liquidity gusher and let its liabilities (and assets) bloat to nearly twice their size. Other central banks infused their