President Donald Trump escalated his feud with the Turkish government Friday morning, ordering a doubling of steel and aluminum tariffs on the NATO ally and threatening to wreck further havoc on the beleaguered Turkish lira.
The subsequent crash in the lira made it the worst performing currency of the year, according to data from Bloomberg, even falling past the frequently falling Argentine peso. This economic intervention also marks the latest flip-flop on whether Trump wants the U.S. dollar to be strong—meaning it takes more of a given foreign currency to buy a dollar—or weak.
When Trump has accused other countries, like China, of “manipulation,” he’s referring to actions by those governments to drive the value of their currencies down, making U.S. imports more expensive in the local currency.
Trump even criticized the Federal Reserve, which has been considered verboten for more than 20 years, for hiking interest rates and, he argued, making the dollar more expensive. He told the Wall Street Journal last year, “Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good. It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.”
This wavering has become endemic to how the Trump administration talks about economics. Larry Kudlow, the head of the National Economic Council, is a longtime proponent of “King Dollar”—the belief that a stable and strong dollar is a cornerstone (along with, of course, low taxes) of economic prosperity. Treasury Secretary Steven Mnuchin has said that a stronger dollar “is a good thing” and “a reflection of the confidence that kind of people have in the U.S. economy.”
To help work this all out in his own mind, Trump reportedly called his former national security adviser (and unregistered lobbyist on behalf of Turkish interests) Mike Flynn at 3 a.m. early in his presidency to ask him whether a strong or weak dollar was better for the economy. Flynn suggested he talk to an economist.