[Updated September 11, 2026]
On April 2, 2025, the Trump administration announced a broad set of new tariffs, including a 10% baseline tax on nearly all imports and steeper rates on goods from countries including China, India, and Mexico. Global markets reacted immediately, and currency values shifted alongside them.
For many people, this was their first time considering the impact of tariffs on exchange rates. US trade policy has changed repeatedly since this initial announcement, with courts striking down some measures and new ones replacing them, but the underlying relationship between trade policy and currency values remains the same. And if you buy or sell foreign currency, it's worth understanding how tariffs and exchange rates are connected.
An important note before we begin: SafeDinar.com is not an investment service or advisor. Nothing in this article should be taken as financial advice or as a prediction of future currency values.
Why Exchange Rates Change
Exchange rates for most currencies (excluding pegged currencies like the Iraqi dinar) shift daily based on a mix of economic and political factors:
Interest rates. When a country's central bank raises interest rates, money held in that country tends to earn a better return. That can draw in buyers from abroad, and buying a currency tends to raise its value.
Inflation. Persistent high inflation erodes a currency's purchasing power over time. Lower, stable inflation generally supports a stronger currency.
Trade balance. A country that sells more abroad than it buys typically sees steadier demand for its currency, since foreign buyers need it to pay for those goods.
Confidence. Confidence in a country's currency is harder to measure, but it matters enormously. When investors lose faith in a country's economic direction or in the independence of its institutions, they tend to put their money elsewhere.
Tariffs touch several of these factors at once: they change what countries buy and sell from one another, they can push up prices through higher import costs, and they raise questions about what comes next. That last piece — uncertainty — is often the most significant in the short term.
What Happened With the 2025 Tariffs
The 2025 tariffs offer an unusually clear illustration.
In the six months following the April announcement, the US Dollar Index fell about 10.8%, its worst start to a year since 1973. The decline ended a long stretch of dollar strength that had run since 2010. Over that same period, the dollar lost value against every major world currency.
Several factors contributed to the decline. Investors bought more of the currencies people typically turn to during uncertain times, including the Japanese yen and Swiss franc. Foreign holders of US assets took steps to protect themselves if the dollar kept falling, in this case by buying fewer dollars. Investors were also uneasy about US government debt levels and about political pressure on the Federal Reserve, which sets US interest rates.
Currencies from countries that rely heavily on exporting goods lost value as well. The Indian rupee weakened following steep new tariffs on Indian goods, a pattern economists generally expect when a country looks likely to sell less abroad.
Tariff policy has continued to shift since. The Supreme Court struck down the April 2025 tariffs in February 2026, and replacement measures followed under different legal authority. The specifics keep changing, but the takeaway is the same: currencies that trade freely respond to uncertainty, and uncertainty has been the one constant.
What Happened During the 2018 Trade Dispute
This isn't the first time trade tensions have affected currency values. During the 2018–2019 dispute between the US and China, the Chinese yuan lost value repeatedly as businesses worried China would sell fewer goods overseas. The US dollar held relatively firm during that period, helped by higher American interest rates at the time.
The broader pattern across both periods is that tariffs introduce uncertainty, and currency values often respond to that uncertainty. But exactly how they respond depends on circumstances that vary case by case.
What This Means If You Exchange Currency
If you hold foreign currency, plan to buy some, or have a trip coming up, tariffs and related exchange rate fluctuations can have a direct effect on what you pay.
And while we can't tell you what any currency will do next, we can offer transparency around our own rates, and practical ways to plan around a fluctuating exchange rate.
Our rates update daily. The rate you see on SafeDinar.com reflects current market conditions. If conditions change, our pricing changes with them.
Ordering ahead minimizes uncertainty. If you're traveling in a few weeks and would rather not track the rate, buying your currency in advance gives you a known price and one less thing to manage before your trip.
It's easy to be notified when an exchange rate changes. Our free exchange rate alerts will email you when a currency you're following reaches a level you've set, so you don't have to manually monitor it.
If you have questions we haven't answered here, our team is reachable by phone, email, or the chat icon below.
Key Takeaways
- Tariffs affect currency values indirectly, mainly through uncertainty. They change what countries buy and sell from one another and can push up prices, but the immediate market reaction usually comes down to confidence.
- Currencies from export-heavy countries tend to be most affected. When new trade barriers are announced, currencies from countries that rely on selling goods abroad often weaken.
- Exchange rates can shift between the day you check and the day you buy. Ordering your currency in advance of a trip gives you a predictable rate and one less thing to track.
- It's easy to be notified when an exchange rate changes. SafeDinar.com's free exchange rate alerts email you when a currency you're following hits a level you set.
