A hidden force is quietly pushing up costs for everything from summer vacations to weekly grocery bills: a weaker U.S. dollar. The dollar has fallen about 10% against other major currencies since the New Administration returned to the White House.
The Wall Street Journal Dollar Index which measures the greenback against other major currencies was sitting at 103.61 near the beginning of 2025. Today it’s down to 94.60.
The question becomes how does this affect you and your business? Please consider the following…
1 – A weaker dollar increases the price of foreign goods. This makes everything you buy that was imported more expensive even before the tariffs are added.
2 – If you export products, this will likely help your business because the exchange rate makes your products less expensive for foreign buyers given the exchange rate. But this primarily helps large multinational firms.
3 – A weaker dollar will hurt small businesses the most. Currency fluctuations create inflationary prices that must be addressed to maintain your margins.
4 – For the American consumer, the reality of a declining dollar is most obvious during foreign travel or when making a direct purchase from an international seller. In Mexico, your dollar is about 16% weaker against the peso compared with early 2025. Declines of about 10% to 17% have been recorded elsewhere against currencies like the Euro.
5 – For goods imported to the U.S., there’s an impact, but it’s harder to gauge. Many economists estimate that, in advanced countries like the U.S., only about 5% to 10% of a currency dip is passed on to consumers.
But this still adds stress to prices that are already affected by other factors like import tariffs.
Let me leave you with this…
I’m writing about this phenomenon for two reasons.
First, given the inflationary reality of the weakening dollar and import tariffs, you need to maintain your margins. The effects of these two economic forces will appear in several expense line items you’d never consider.
We’d expect them to effect imported goods, but most of the companies you do business with feel the same pressures. Let’s think about something you’d never expect to be affected like your utility costs.
Your local utility provider imports parts to deliver electricity and natural gas to your doorstep. As such, even your utility bills will probably rise due to the weakening dollar.
You need to monitor your monthly financial statements and raise your prices when necessary. It’s not like you’re going to be able to get your electricity or natural gas from a less expensive competitor.
The second reason I’m writing about this is that we must consider the impact on our employees as well. If you don’t want to lose them, you’ll need to give them a raise so they can afford to live.
Without that additional compensation, they may be forced to leave. This, of course, will put even more upward pressure on your pricing.
The affordability question that everyone seems to be discussing isn’t just about tariffs. It’s also about how much less your dollars are now buying.
In many instances, that number has decreased by almost 10% in the last year. If you don’t address the problem, it may adversely affect your business.
As always, if you’re having problems with your accounting and tax work, please contact us today. We’d love to help.
We’re all going to get through this. Let’s get through it together…
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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