Weakening Dollar: 5 Essential Questions CEOs Should Ask

Since April 2025, the Trump administration has been negotiating bilateral trade deals country-by-country. The pattern is clear: trade-surplus countries are being pushed to allow their currencies to appreciate toward parity as part of tariff and market-access discussions.

This is not a single dollar devaluation. It is country-by-country currency corrections, negotiated one at a time.

In April 2025, the administration explicitly included “currency issues” in negotiations with Japan. The euro appreciated 13 percent in 2025. The yuan strengthened 4.3 percent. The yen moved from 160 to the dollar in early 2024 to 140 by April 2025—a 12 percent appreciation—before giving back some gains.

These are not market accidents. They are negotiated outcomes. And they create a fragmented currency landscape that turns exchange rates from a technical variable into a core strategic issue.

Why This Is Happening

For decades, trade-surplus countries kept their currencies artificially undervalued to boost exports. China accumulated $7.4 trillion in trade surplus over 15 years through this model. Japan, Germany and others ran similar strategies. The result: massive, persistent trade imbalances.

Trump’s bilateral negotiations are forcing these currencies back toward fair value. Not through a single dollar devaluation, but through country-by-country agreements that rebalance trade.

Here are five essential questions CEOs and CFOs should be asking to insure that FX is becoming a strategic advantage, not a brake on real growth:

QUESTION 1: When Does Currency Become a Core Strategic Issue for the CEO and Board?

Currency crosses into CEO territory when three conditions converge:

First: Pricing power differs by country. When the euro appreciates 13 percent but the yen is volatile and the yuan moves 4 percent, your pricing strategy cannot be uniform. A German competitor faces different margin pressure than a Japanese one. If you treat FX as one global adjustment, you lose.

Second: Supplier economics shift faster than contracts can be reset. Consider a U.S. manufacturer sourcing components from Mexico. The peso strengthens toward parity. Your input costs rise in dollar terms. But your sales contracts were locked in six months ago. By the time you renegotiate, the advantage flips.

Third: Foreign competitors face currency appreciation and restructure aggressively. When Germany’s fiscal expansion drove the euro up 13 percent, German manufacturers did not sit still. They accelerated automation. They took cost out permanently. They used the currency pressure as a forcing function to get more competitive. Meanwhile, if you are celebrating dollar-reported revenue gains without reinvesting, you fall behind.

At that point, FX is no longer a finance variable. It determines who holds margin, who can invest, and who falls behind.

QUESTION 2: What Are the First Three Strategic Assumptions CEOs and CFOs Should Challenge?

If currency parity corrections continue through bilateral negotiations, three assumptions embedded in most plans will break.

Assumption One: “This will revert.”

Bilateral currency outcomes driven by trade negotiations do not snap back cleanly. Trump has shown he will enforce agreements. When Japan agreed to let the yen appreciate from 160 to 140, that was not a temporary market fluctuation. It was a negotiated shift. When the euro moved 13 percent on Germany’s fiscal expansion and trade rebalancing, that reflected structural change, not cyclical noise.

Companies that wait for “normalization” will be caught flat-footed.

Assumption Two: “Reported gains reflect real performance.”

When currencies correct toward parity, dollar-reported revenue and margins inflate for U.S. companies. A European subsidiary books 13 percent higher revenue in dollars simply from translation. Unless leadership strips out FX effects, teams get rewarded for currency movement—not execution.

I have seen this repeatedly. Bonuses paid. Promotions made. Investments approved. All based on numbers inflated by FX translation. Then the currency stabilizes. The “performance” disappears. And leadership realizes they were celebrating accounting, not strategy.

Assumption Three: “Competitors face the same conditions.”

They do not. A U.S. company competing against a German firm and a Japanese firm faces three different currency environments. The German competitor dealt with a 13 percent euro appreciation. The Japanese competitor navigated yen volatility from 160 to 140 to 156. The Chinese competitor managed a 4.3 percent yuan appreciation under tight government control.

Each competitor restructured differently. Each has different cost pressure. Each has different pricing flexibility. If you assume uniform conditions, you misread the battlefield.

QUESTION 3: How Should Leadership Rethink Where Value Is Created and Captured?

When currencies fragment, they create a window during which an American company can catapult its strategic position—country by country.

Example: A $750 Million Automotive Components Supplier

Consider a U.S.-based automotive components supplier with plants in Ohio and Mexico and customers in North America and Europe.

As the euro and peso appreciate toward parity:

• European sales inflate in dollar-reported terms. Revenue looks stronger.
• Mexican labor costs rise in dollar-adjusted terms. Input costs creep up.
• A German competitor, facing 13 percent euro appreciation, accelerates automation and takes cost out permanently. They emerge leaner.

On paper, the U.S. firm’s margins improve. In reality:

• Input costs are rising
• Pricing discipline weakens because “we are doing fine”
• The German competitor is reinvesting aggressively

If leadership celebrates the EPS lift instead of reinvesting in productivity, pricing expertise and market position, the advantage flips within two years.

But the smart play is different:

The U.S. company uses the FX window to:

• Lock in European distribution relationships before currency stabilizes
• Invest in automation to match the German competitor’s cost-out
• Train sales teams to sell on value, not FX-driven price advantage
• Build pricing capability that can adjust country-by-country as currencies move
• Increase feet on the ground in Germany to capture share while the euro is strong
• Search adjacent customer segments in markets where currency shifts create openings

This is the window. Use it or lose it.

Where Value Is Really Created:

When currencies correct toward parity, value is created by:

• Investing in productivity and automation at high speed. Not next year. Now. While you have FX-driven cash flow margin.
• Building pricing units that handle country-specific pass-through. Not global pricing. Country-by-country pricing expertise.
• Training people to sell on value, not price. FX will not always favor you. Lock in customers on switching costs, service, innovation.
• Increasing physical presence in trading partner countries. Speed matters. Competitors are doing this. You must too.
• Securing strongholds like distribution before currency stabilizes. These create durable market share that survives FX reversals.
• Searching adjacent customer segments. Currency shifts open new market segments that were previously unprofitable. Find them fast.

QUESTION 4: What Does Currency Parity Correction Do to Capital Allocation Over the Next 3–5 Years?

Over the next 3–5 years, currency parity corrections change capital allocation more than most CEOs expect.

Pull forward investments in:

Productivity and automation. If the euro appreciated 13 percent and German competitors used that pressure to automate, you must match that. Not in three years. Now. The FX window provides cash flow. Use it to permanently lower your cost structure.

Innovation and new products.Reevaluate your product portfolio. Use AI-embedded next-generation products. The companies that innovate during the FX window lock in differentiation that survives currency reversals.

Supply chain resilience. As currencies correct to parity, imports from some countries become more expensive in dollar terms. Companies that diversified supply chains and built redundancy will weather this. Companies that stayed concentrated in one country will get squeezed.

Capabilities that lock in customer switching costs. Service. Integration. Data. Customization. Anything that makes it hard for customers to leave. Because when FX stabilizes, price advantage disappears. Switching costs remain.

De-prioritize or delay:

Share buybacks driven by FX-inflated EPS. If your earnings are up 10 percent because of currency translation, buying back shares rewards accounting, not performance.

Investments that assume currency stability. Any multi-year capital project that bakes in current FX assumptions is fragile. Stress-test it against 10 percent currency swings in either direction.

QUESTION 5: If Advising a CEO–CFO Pair Today, What One Decision Should They Revisit in the Next 90 Days?

Pricing.

Specifically: pricing expertise, authority, accountability and impact on cash flows.

Why pricing?

Because currency parity corrections create immediate pricing pressure that annual cycles cannot handle. Country managers lack perspective. Finance lacks mandate. And every month you delay, margin leaks.

What to do in 90 days:

Centralize pricing decisions. Pull pricing authority out of country GMs and into a central pricing unit that sees the full picture across currencies.

Shorten pricing reset cycles. Move from annual pricing reviews to quarterly or monthly resets for high-exposure products.

Define explicit FX pass-through rules by country. Not a global rule. Country-specific rules. In Germany, how much euro appreciation can you absorb before raising prices? In Mexico, at what peso level do you renegotiate supplier contracts? Write it down.

Reconstruct your S&OP mechanism and its decision rules. Sales and operations planning must now include FX scenarios. If the yen moves 5 percent in 30 days, what changes? Decision rules must be clear.

Implement a new frame of decision rules in supply chain. As currencies appreciate in trading partner countries, supply chain decisions will use more cash. You need real-time visibility and clear rules.

Build a weekly cash flow monitoring tool. Not monthly. Weekly. Currency moves fast. Cash flow visibility must match that speed.

The Bottom Line

Currency parity corrections driven by bilateral trade negotiations will not arrive with a single announcement. They will arrive one negotiation at a time. One currency at a time. One supplier at a time.

The companies that recognize this early—and move fast—will use the FX window to put themselves on a durable higher growth path.

The companies that wait will discover their “performance” was accounting. And their competitors restructured while they celebrated.

Time is now.

The CEO and the team must do rehearsals. Make appropriate organizational changes. Lots of pricing models are available in the world to stimulate your thinking. CEO hands-on leadership will energize the company and its ecosystem.

The question is whether your company will seize the opportunity—or become its casualty.