The Greenback in Freefall: How Trump’s Fed Attacks are Sinking the Dollar—and What Investors Should Do

The U.S. dollar is in freefall, hitting a three-year low against major currencies, and it’s not just the Federal Reserve’s rate cuts driving this decline—it’s the White House’s relentless attacks on Fed Chairman Jerome Powell. Make no mistake: Political interference in monetary policy is spooking investors and eroding confidence in the world’s reserve currency. If you’re not adjusting your portfolio for this shift, you’re leaving money on the table.

The greenback’s slump has been swift. The Dollar Index, which tracks the U.S. currency against a basket of six rivals, has dropped over 9% since March 2023—its lowest since 2018. Meanwhile, President Trump’s public berating of the Fed has only amplified the uncertainty. “The Fed is destroying our economy,” Trump recently declared, slamming Powell for raising rates “too high for too long.” But here’s the rub: The Fed’s independence is its lifeblood. When a president openly pressures the central bank, markets lose faith in its ability to act in the best interests of the economy—not the administration.

This isn’t just about politics. A weaker dollar is a double-edged sword. For U.S. companies with global operations, it’s a gift: Their overseas earnings convert into more dollars at home. Think of giants like Boeing (BA) or Caterpillar (CAT), which suddenly see their international sales boost by double digits. But for Americans buying foreign goods or holding foreign debt? Not so much. And if the dollar’s decline becomes a rout, inflation could surge anew as import prices rise.

Investors, though, should be dancing. A weaker dollar is a tailwind for commodities priced in greenbacks. Gold (GLD) has already surged over 15% year-to-date, while oil (USO) is clawing back to $90 a barrel. Meanwhile, emerging market stocks (EEM) and currencies are on fire, as investors flock to higher-yielding assets in regions less tied to U.S. monetary policy.

But here’s the critical move: Short the dollar, long the world. Backing companies that benefit from a weaker greenback—like miners (GDX) or exporters (EPD)—is a no-brainer. Also, consider Treasury Inflation-Protected Securities (TIPS) to hedge against the inflationary risks of a collapsing currency. And forget the “safety” of U.S. bonds for now; if the Fed is politicized, its credibility—and the dollar’s—is in play.

The writing is on the wall. The dollar’s 9% drop this year isn’t an anomaly—it’s a trend. With Trump’s rhetoric heating up and the Fed’s independence under siege, this decline could deepen. Investors who ignore this shift will be left holding a currency that’s losing its luster. The time to act is now: Go global, go gold, and brace for a world where the almighty dollar isn’t so mighty anymore.