Major U.S. multinationals have received financial relief from the declining dollar value because it reduces their expenses from Trump-era tariffs which resulted in improved second-quarter earnings despite increasing international trade costs.
The depreciation of the U.S. dollar allowed Netflix and PepsiCo and 3M and Levi Strauss to report better-than-expected earnings because it boosted their international profits. The international revenue of 40% at PepsiCo led to a reduced forecast for annual profit decline while Coca-Cola increased its full-year earnings projection.
The U.S. dollar value has decreased by 10% throughout this year because investors worry about rising federal debt and unpredictable growth and erratic trade policies. The depreciation of the dollar strengthens U.S. export competitiveness while making foreign income more valuable when converted back to U.S. dollars.
The decline in dollar value serves as a vital protection against the rising costs caused by President Trump’s import tariffs for businesses operating globally.
The sectors with the greatest international exposure including technology and industrials and healthcare and consumer discretionary will experience the most benefits. The LSEG reports that foreign revenue generates 38% of total S&P 500 revenue.
Investors monitor currency dynamics because tariffs create cost pressure while stock valuations approach their highest points. Dakota Wealth’s Robert Pavlik stated that Trump’s strategy to reduce the dollar value for export promotion seems to be successful.
