Donald Trump wants to be a weak-dollar president. But he’s running on a strong-dollar platform.

That’s the prevailing view of Wall Street economists who’ve run the numbers on Trump’s second-term plans. Tariffs on US trade partners, and tax cuts that could push inflation and interest rates higher, add up to a mix that would encourage the greenback to rise, they reckon - all else being equal.

Which of course it may not be, if Trump - who upended plenty of expert predictions last time he arrived in the White House - has any say in the matter.

The GOP candidate has completely overhauled the party in his populist image, and named a fellow strong-dollar skeptic in Ohio Senator JD Vance as his running mate. If he defeats his Democratic opponent, likely to be Vice President Kamala Harris, in November then Trump looks set to start a second term right where the last one left off - railing against an overvalued currency, which he blames for blowing out America’s trade deficit and hollowing out its industry.

But as Trump discovered after his 2016 victory, presidents don’t have any straightforward levers they can pull to depreciate the dollar. And the ones that have been mooted this time around - leaning harder on the Federal Reserve to keep borrowing costs low, or strong-arming other governments to lift their own exchange rates - would likely alarm investors. That’s a major drawback for a leader who’s always cared about how markets judge his policies.

“The main institution that is standing between Trump and the devaluation is the S&P,” said Freya Beamish, chief economist at TS Lombard, referring to the benchmark US equity index. Any kind of aggressive step to devalue the dollar “would send shock-waves through the global financial system.”

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In his first term, Trump often berated other countries for keeping their exchange rates too weak against the dollar and he repeatedly lobbied the Fed to ease monetary policy.

Now back on the campaign trail, he used a Bloomberg Businessweek interview to make it clear that the subject remains top of mind.

Asked what kind of economy Americans need, Trump promptly raised the “big currency problem.” He said he keeps hearing from manufacturers that “nobody wants to buy our product because it’s too expensive” - while other countries try to keep their currencies “weak all the time” because it gives them an edge in exports. Trump expressed particular irritation with the cheapness of Japan’s yen and China’s yuan.

The day before the interview was published, Trump had named Vance as his No. 2. Last year, Vance challenged Fed Chair Jerome Powell to explain how ordinary Americans benefit from having the world’s reserve currency, a comment seized upon by traders to intensify their scrutiny of Trump’s likely dollar policy.

For all the rhetoric, in reports over the past week, banks including Morgan Stanley and Deutsche Bank AG concluded that a Trump win would still most likely boost the dollar.

Among the key arguments: Looser budgets as a result of Trump’s proposed tax cuts would require the Fed to keep rates higher, supporting the greenback. A wave of tariffs would have a similar effect, as well as making foreign goods less attractive and thus reducing demand for the currencies of trade partners.

Nevertheless, Trump’s declared desire to pressure the greenback has left everyone trying to read the tea leaves for clues as to how he might go about the task - and who he might put in charge of it.

Economic advisers who speak with Trump regularly have been hatching plans for a dollar-focused trade policy, including two who’ve been floated as possible picks for Treasury secretary if Trump wins.

Robert Lighthizer, who previously served as Trump’s top trade official, has expressed openness to a range of options for balancing the US external deficit, perhaps including controls on capital that flows into the US to cover the gap.

Scott Bessent, a hedge fund manager and prominent fundraiser for Trump, has talked of expanding the Biden administration’s “friendshoring” policy to create a tiered system among America’s partners, in which countries that help further the goal of a weaker dollar would be rewarded with trade advantages.

If those count as out-of-the-box ideas, there are some more direct ways that a Trump administration could seek to counter dollar strength.

The most obvious option is to intervene in currency markets, either verbally or by having the Treasury Department sell dollars.

The Treasury had some $206 billion in its Exchange Stabilization Fund as of May - probably not enough to make a difference. George Saravelos, head of global foreign-exchange research at Deutsche Bank, estimates that an effective devaluation would require the selling of “multiple trillions” as well as the imposition of capital controls.

The US and its allies in the Group of Seven have promised each other not to take unilateral actions over their currencies, as Treasury Secretary Janet Yellen pointed out at a press conference in Rio de Janeiro on Thursday when she was asked about Trump’s dollar comments. G-7 members are committed to letting markets determine exchange rates, with interventions supposed to happen only in periods of undue volatility and then only in consultation with partners, Yellen said.

There is a history of US-orchestrated international efforts, most notably the 1985 Plaza Accord. Back then, Washington got backing from the UK, West Germany, France and Japan to jointly use their currencies to devalue the dollar. But in 2024 there are steeper hurdles.

For one, the global foreign-exchange market is so much bigger now that it’s harder to push back against the dollar’s trajectory.

It would also be a challenge to recreate that kind of unity - especially for a Trump administration that may well be picking fights with US allies over trade. And a deal would require support from the central banks of participating nations.

“In 1985, central banks were more compliant to the needs of finance ministers,” said Marc Sumerlin, founder of Evenflow Macro who worked on economic policy in the George W. Bush White House. “Today, getting other countries to help weaken the dollar would probably involve more coercion than cooperation.”

A second Trump option would be to apply some coercion to his own central bank, whose interest rates are the strongest determinant of the greenback’s value.

“It’s the Fed that’s going to determine how the dollar will respond to Trump’s policies,” said Karthik Sankaran, a veteran of foreign-exchange markets.

Should any of them - tax cuts, tariffs or immigration control - turn out to be inflationary, then the Fed’s typical response would be to hike rates, which drives up the greenback. “If there’s any indication that the Fed is not going to be able to do that,” said Sankaran, “the dollar would sell off.”

Trump has shown he has no qualms about verbally bashing central bankers, but it’s not clear how he could go much further. Any formal effort to curb Fed independence could lead investors to conclude that the US has given up on inflation vigilance, and risk a loss of confidence in the economy and markets.

What’s more, short of firing people, there won’t be too many upcoming Fed vacancies for the next US president to fill. In the Bloomberg interview, Trump said he’d let Powell complete his term as chair, which runs into 2026, “if I thought he was doing the right thing.” The Fed chief has repeatedly made clear he doesn’t view dollar policy as within his purview.

All of this leaves another option that some Trump aides - and market analysts too - reckon might work.

Tariffs, in themselves, may strengthen the dollar - but they could also be used as a cudgel to push other nations, including China, to let their own currencies appreciate.

Trump, the self-proclaimed tariff king, has floated applying them at a rate of 50% or higher on Chinese goods. And he’s open to using the threat of tariffs as a bargaining chip. “Man, is it good for negotiation,” he told Bloomberg.

Wall Street economists are reviewing how Trump wielded the tariff weapon after 2016, and some think it could be an effective way to encourage dollar depreciation - especially since some key economies are already interested in propping up their own currencies.

“If you have a world where Trump wants a weaker dollar, and others are complaining about dollar strength - Chinese, Japanese, Korean - at the same time that Trump is proposing tariffs, there’s a prospect for appeal,” said Sankaran.

Others see a risk that US trade partners would be reluctant to slash currency reserves, and might choose to retaliate with their own import charges instead.

“I’m not sure tariffs would be enough of a stick to get other countries to want to partake,” said Noel Dixon, a global macro strategist at State Street Corp. “Mechanically, they would have to sell a lot of dollars to do that. If anything, it’ll just cause a trade war.”

The exchange rate isn’t the only dollar question on Trump’s mind if he wins a second term. No. 13 in a list of 20 promises his campaign released reads: “Keep the US dollar as the world’s reserve currency” - a goal that could potentially be at odds with the desire for a weaker greenback.

Since 1945 the dollar has been the closest thing there is to global money - an anchor currency for friends and foes alike.

But lately the search is on for ways to do international business without using the dollar. It’s partly driven by US adversaries like Russia and China, seeking ways to put their economies beyond reach of sanctions. Allies like India and the Gulf Arab states have also shown interest in doing more trade in their own currencies. Much of the debate plays out at the fast-growing BRICS group of emerging nations.

Trump is eyeing it carefully. It may be an area where he differs from his running-mate Vance, who sees downsides to reserve-currency status.

“I hate when countries go off the dollar,” Trump told CNBC in March. “I would not allow countries to go off the dollar.”

  - Bloomberg