Is a Strong Dollar Good for Americans? newsweek

The “strong dollar” has been a mantra for the United States for decades. Recently, as the euro has fallen to an 11-year low against the dollar, Treasury Secretary Jacob Lew has once again been paying homage. “I have been consistent in saying, as my predecessors have said, that a strong dollar is good for the United States.”

Really? This week, a slew of blue chip U.S. companies–from Caterpillar to Procter & Gamble to DuPont–reported a sharp fall in earnings attributed in part to the rising U.S. dollar.

While a stronger dollar lowers the cost of imports, which is good for consumers, it hurts U.S. competitiveness. With U.S. companies ever more dependent on exports and overseas sales, a strong dollar means that each sale denominated in weaker currencies abroad returns less to the United States. Doug Oberhelmen, chief executive of Caterpillar, said the surging dollar “will not be good for U.S. manufacturing or the U.S. economy.”

For the Obama administration, which has heavily promoted the importance of U.S.-based manufacturing and has made much of the recent small uptick in manufacturing jobs in the United States, a statement like that should be setting off alarm bells.

And if that’s not enough, this week’s House and Senate hearings on U.S. trade policy should have done the trick. One after another, members of Congress from both sides of the aisle said it was crucial that the administration at least try to address currency issues in the current Trans-Pacific Partnership (TPP) trade negotiations.

Yet the U.S. Trade Representative, Mike Froman, repeatedly deferred, saying that currency was a Treasury responsibility. And Treasury’s only response so far has been to say that the surging dollar is just fine.  Read More at Is a Strong Dollar Good for Americans?