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How the Strength of the U.S. Dollar is Impacting Global Trade

Since the middle of 2011, the value of the US dollar has increased by 20% and economists are predicting that the appreciation will continue to rise. Unfortunately, the appreciation of U.S. currency is predicted to come at a cost to U.S. businesses amidst shockwaves from the Brexit vote, depreciation of the pound, slouching oil prices and the slowing of the Chinese economy.

U.S. exporters are competing for flat sales in a global economy that is currently less competitive than years past. When the U.S. dollar is strong and the global market is slow, export revenues for U.S. businesses suffer. Foreign exporters are able to export product at lower prices and still obtain high revenue while increases in the price of product from the U.S. means a decrease in sales and revenue.  Furthermore, in a slow-growth, low competition global marketplace where the dollar is king, the U.S. trade deficit increases as the value of imports exceeds the value of exports.

To test the prescience of economists in regards to the continued strength of the U.S. dollar, there are several matters to continue monitoring as 2016 comes to a close.  The top two blockbuster events most likely to impact global trade are the U.S. Presidential Election and the EU referendum in the UK.  Topics to keep monitoring are emerging market growth and China’s economic stabilization.

U.S. businesses typically respond to slow market growth with cost saving solutions. For over 20 years Allyn has offered cost effective Tax, Global Trade Compliance and Logistics packages that minimize risk and integrate global operations to assist businesses regardless of economic conditions. If you are looking to take advantage of duty deferral/elimination, reduce taxes and fees, and streamline supply chain procedures, please contact Allyn International at sales@allynintl.com or visit our website, www.allynintl.com.