“American exceptionalism,” the catchphrase that compelled investors to drive up U.S. asset prices from 2023 until early last year, has given way in recent months to alarm — “Sell America!”

Investors have gotten the message.

The value of the dollar has sunk 10% in the past 12 months compared with other major currencies. U.S. equities last year and in 2026 have lagged the gains of major foreign stock markets, while U.S. bond prices have fallen since November, pushing up yields.

The cause — sudden shifts by the Trump administration in trade, diplomacy and economic policy have tarnished the appeal of U.S. assets, according to economists and experts in finance.

The disruption has shattered the rules-based order for trade, finance, international law and other facets of foreign relations led by the U.S. since World War II, Canadian Prime Minister Mark Carney said on Jan. 20 in a speech to the World Economic Forum.

As a result, CFOs need to adjust scenario planning to the prospect of higher capital costs, greater foreign exchange risks and persistent volatility across bond, equity, currency, commodity and other markets, the economists and experts in finance said.

“Diversification away from dollar-denominated securities has accelerated over the past few weeks as increasing unpredictability out of Washington has global investors hedging against further dollar weakness,” RSM U.S. Chief Economist Joe Brusuelas said Friday in a note.

The battered dollar stands at center stage in an unfolding drama of market volatility.

Brusuelas predicted “another leg down in the value of the greenback because of erratic trade and financial policy out of Washington” and signs of an end to fiscal austerity in Japan.

‘Yo-yo’ dollar policy

President Donald Trump has long favored weakening the dollar to spur exports. He highlighted his influence over the greenback on Jan. 27 and expressed indifference to its volatility, telling reporters, “I could have it go up and down like a yo-yo.”

The 63% surge in the price of gold during the past year underscores worry about the turbulence of Trump policy and the credibility of the dollar as a safe haven, the economists and finance experts said. The Swiss franc, another harbor from financial turmoil, has gained 18% against the dollar during the past year.

Although beleaguered, the dollar is unlikely to soon lose its status as the world’s dominant currency.

No other currency comes close to the dollar as a means of exchange, unit of account in trade invoicing and reserve currency, EY-Parthenon Chief Economist Gregory Daco said.

The dollar’s No. 1 status rests on the large, comparatively stable U.S. economy, the country’s deep and liquid financial markets and the independence of the Federal Reserve, Daco said in an interview.

“Those are all fundamental factors that need to be in place and need to be confirmed over time in order for any currency to rival the U.S. dollar,” he said.

Instead of an erosion in the dollar’s status, foreign exchange may fragment into blocks amid tensions between longstanding partners in trade and finance, Daco said.

Also, volatility in foreign exchange markets will probably increase because of four “historic supply shocks” from changes in U.S. trade, immigration and fiscal policies as well as the rise of artificial intelligence, Daco said.

For example, Trump’s imposition in early April of high U.S. tariffs on all but a few trading partners spurred a 27% increase in foreign exchange activity during the month compared with April 2022, according to the Bank for International Settlements. As the dollar plunged that month, average daily foreign exchange turnover hit a record $9.5 trillion.

A ‘shock’ and a ‘lesson’

The sudden announcement of high tariffs “was a bit of a shock to the central banks of the world,” said Wes Levitt, CFO of AlphaTON Capital, a digital asset treasury company.

“It was a lesson to a lot of them that they need to have more diversified exposure and not be so beholden to the dollar,” he said in an interview. “I doubt they will flip that position on a dime just because tariffs get lowered.”

While taxing imports, Trump has also shaken confidence in the dollar by threatening the independence of the Fed to set monetary policy free of political influence, according to the economists and experts in finance.

For several months Trump has pressured Fed Chair Jerome Powell to spur economic growth by slashing the federal funds rate to as low as 1% from its current range from 3.5% to 3.75%.

The Justice Department recently began investigating Powell for his testimony before Congress last year on the renovation of the Fed’s headquarters. Powell in a highly unusual statement on Jan. 11 called the probe an effort by the White House to strong-arm a reduction in the benchmark interest rate.

The dollar has also declined since January 2025 as Trump talked of annexing Canada and Panama, and implied he would consider using military force to seize Greenland, a semi-autonomous territory of longstanding NATO ally Denmark. Trump said last month that he would not deploy the military against Denmark but has not discarded his plan to take Greenland.

While engineering a tax break that will likely stimulate the economy this year, Trump’s fiscal policy has eroded confidence in the dollar by enlarging the U.S. debt and deficit, the economists and financial experts said.

The federal budget deficit for fiscal year 2025 is estimated as high as 6.2% of gross domestic product, a level exceeding the 50-year average of 3.8% and rare for a period without recession or war, according to the Congressional Budget Office. Total debt held by the public has swelled to nearly 100% of GDP.

Trump’s foreign policy has also frayed the value of the dollar and cast doubt on its long-term dominance, the economists and financial experts said.

‘Harsh reality’ with ‘no constraints’

In a speech in Davos, Switzerland, Carney highlighted “a rupture in the world order, the end of a pleasant fiction, and the beginning of a harsh reality where geopolitics — where the large, main power — is submitted to no limits, no constraints.”

Carney, a former central banker, called out a new global “system of intensifying great power rivalry, where the most powerful pursue their interests using economic integration as coercion,” in which “the strong do what they can, and the weak must suffer what they must.”

The biggest powers “have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion and supply chains as vulnerabilities to be exploited,” he said.

The sudden, unanticipated collapse to the global order known as Pax Americana, or “American Peace,” has sent many CFOs and their C-suite colleagues scrambling to update their strategic plans, the economists and finance experts said.

“CFOs don’t plan for the next tweet, they plan for three or five years in the future,” said Dory Malouf, director of value engineering at Kyriba, a liquidity management software company.

“It’s been very hard during the last year in particular for our customers to be able to understand what their cost structures look like given the volatility, whether it’s currencies, tariffs or geopolitics,” he said. For example, a weaker dollar raises the cost of purchasing foreign equipment or buying a foreign company.

CFOs should prepare for dollar weakness during the next 12 to 24 months, Malouf said in an interview.

Economists and financial experts said the CFOs can buffer their companies against the harm from the turbulent dollar exchange rate by taking four steps:

1.  Reduce volatility by “layering” currency hedges. CFOs can avoid having to buy euros, yen or other foreign currencies at onerous exchange rates by avoiding reliance on “spot” currency rates.

Instead, finance executives should create a rolling program that layers forward contracts for 50% of the currency exposure six months in the future and for 25% of exposure 12 months in the future, Malouf said.

Volatility of the dollar “is forcing a lot of people who don’t want to be currency speculators to do so,” Levitt said. CFOs “need to be more cognizant of macro risks, deleverage and keep more of a fortress balance sheet as much as possible.”

2. Shift currency risk to foreign suppliers. CFOs who must pay in foreign currency should request that suppliers share the burden from a weaker dollar. Or, in talks with suppliers, they should try to set pricing in dollars at the current rate, Malouf said.

“Locking in foreign currencies at the current dollar rate gives you the opportunity to make sure that if the dollar continues to get weaker your costs are not rising,” he said.

3. Eliminate foreign debt before it becomes more costly. In order to dodge the cost of a declining dollar, financial executives should expedite foreign payables, Malouf said.

“If you owe money to foreign vendors and have the cash flow, pay them sooner rather than later,” he said.

4. Diversify supply chains. Over the long term, financial executives should source more of their inputs from U.S. companies or from countries whose currencies are pegged to the dollar and depreciate in tandem with it.

“If diversification overseas was a plan that you were already considering — and you thought it was a reasonable decision — maybe dollar volatility is the catalyst to pull the trigger,” Levitt said.

While buffering against harm, CFOs can also benefit from a weakening dollar by highlighting to investors that earnings generated abroad in euros, pounds and other currencies are worth more when converted to dollars.

The “currency tailwind” can blunt any domestic weakness and boost reported revenue and earnings per share, Malouf said.

Financial executives can also leverage the fact that their goods sold abroad generate higher revenue when repatriated as dollars. On the one hand, they can keep prices the same and pocket the extra profit margin.

Or, in a move that is often more advantageous over the long term, they can trim prices abroad to gain market share, Malouf said.

Carney in his speech primarily targeted middle-size powers, urging them to unite and decisively adapt to the shattering of the seven-decade foundation for global order. Yet the gist of his comments could have been made to CFOs.

“We know the old order is not coming back,” Carney said, adding “from the fracture, we can build something better, stronger.”