I’m an Economist: Here’s How Trump’s VP Pick, JD Vance, Could Impact Your Wallet
People who tune into politics knew J.D. Vance as a scrappy young upstart U.S. senator and a rising star in the GOP before Donald Trump chose him as his 2024 running mate. Those in literary circles knew him as the author of “Hillbilly Elegy.”
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But the Republican vice presidential nomination has propelled him to the center of the national spotlight; and, with both campaigns so squarely focused on the economy, the country wants to know more about Vance and his philosophies about money — particularly how his ascent to the White House could affect their finances.
A veteran economist thinks Vance has gone all in on one monetary philosophy that, if implemented, has an outsized potential to impact the wallets of ordinary Americans.
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Meet the Economist
Edward Hirs, a Yale-trained energy economist, is the inaugural Energy Fellow and a lecturer at the University of Houston, where he teaches both undergraduate and graduate-level courses. He is frequently consulted by national and international media and has authored and co-authored published opinion pieces and reference papers on energy markets and corporate governance. He also founded and co-chairs an annual energy conference at Yale University.
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The Dollar Is Strong — Too Strong, in Vance’s Mind
In 2022, the U.S. dollar was stronger than it had been in nearly two decades. It slipped a bit in 2023. This year, however, it’s outperforming most world currencies once again — and the man who might be a heartbeat away from the presidency come January does not think that’s a good thing.
“The Republican candidate for vice president, Sen. J.D. Vance, has picked up a prior Trump policy goal of ‘devaluing the dollar,'” Hirs said.
Vance’s desire to reduce the dollar’s purchasing power is a controversial and high-stakes proposition that could directly impact your wallet.
What’s To Gain by Devaluing the Dollar?
There are pros and cons to a strong U.S. dollar — which the Atlantic Council calls the world’s leading reserve currency since World War II — and each can affect people’s wallets differently.
But first, what is a strong dollar?
The U.S. Dollar Index (DXY) measures the dollar’s strength or weakness relative to a basket of other world currencies issued by its most significant trading partners.
The causes and impacts of global currency fluctuations are complex, but U.S. Bank Wealth Management sums up the concept this way: “When the dollar strengthens, it means more foreign money is flowing into the U.S. than the other way around.”
A strong currency has more purchasing power than a weak one, so Americans traveling abroad with pumped-up greenbacks can currently buy more things overseas for less. Conversely, a strong dollar makes American goods more expensive in other countries, and that’s precisely why Vance wants to devalue the dollar.
In Pursuit of New Exports, America Would Pay More for Imports
America imports many more goods and services than it exports. The World Bank says imports account for 14.59% of the U.S. GDP, compared to 10.89% for exports. Proponents like Vance believe a weaker dollar could narrow that trade deficit by making U.S. exports cheaper and more attractive to foreign buyers.
But trade is a see-saw; and, while a devalued dollar would benefit American exporters, an equal and opposite reaction is guaranteed for the endless stream of foreign-made clothes, toys, tech, gadgets, garden hoses and everything else you buy from Walmart, Amazon and the rest.
“It would increase the cost of imports,” Hirs said.
According to Foreign Policy magazine, that’s the whole point for Vance and his camp. More expensive imports would make it harder for China and other producer nations to flood America with cheap goods, which the New York Times says led to a decline in U.S. industry and cost 1 million American manufacturing jobs over the last 20 years.
But in an economy that relies on consumer spending for 68% of its GDP and takes far more than it makes, a devalued dollar’s impact on your wallet would be much less abstract.
“If the dollar’s value is cut in half vs. other currencies, the cost to the U.S. consumer of buying goods from overseas will double,” Hirs said.
A Weakened Dollar, Lower Interest Rates and Aggressive Tariffs Are a Recipe for Inflation
Vance is just the most visible high-ranking member of the devaluation movement’s adherents. In April, Politico reported that former trade chief Robert Lighthizer — a potential Treasury secretary in a second Trump administration and the architect of Trump’s first-term tariff policy — was already working with other top economic advisors to Trump on ways to devalue the dollar should the Republicans win in November.
If that were the only dollar-weakening proposition in play, the potential impact on your wallet might not be so pronounced. However, devaluation is just one element in a full-court press by Trump to remake global trade, which devaluation skeptics like Foreign Policy say goes too far and will reignite inflation back home.
First, Trump has vowed to expand his aggressive tariff policy, which would further boost the cost of imports in pursuit of cheaper U.S. exports. In addition, Trump has campaigned on pressuring the Fed to lower interest rates, which could weaken the dollar even further since high interest rates prop up currencies.
Some economists say that could even further diminish the purchasing power of ordinary Americans who have spent years getting less for more during the inflationary era under President Biden, which Trump and Vance are actively campaigning against.
Vance’s Plan Could Help You If You Buy Stocks and Hurt You If You Buy Gas
Devaluation opponents say most Americans benefit from inexpensive imports and that a strong dollar is the most potent antidote to inflation.
Vance, however, is clearly in the corner of anxious domestic manufacturers, like the kind NPR recently profiled, who are leaving money on the table, orders unfilled and jobs uncreated because foreign competitors with devalued currencies continuously undercut them.
Kiplinger agrees that the dollar is overvalued and argues that weak foreign currencies are bad for corporate profits and, therefore, the average earner’s 401(k).
Regarding the potential cons, Hirs thinks gas prices could rise if the dollar’s value falls.
“OPEC+ will, naturally, raise the price of oil to maintain their members’ purchasing power,” he said.
Currency values aren’t tied only to trade. They also influence debt, which America has in heaping doses.
“Devaluing the dollar, as was done during the Reagan administration, would also lessen the dollar value of our huge national debt,” Hirs said. “With much of this held by our trading partners overseas, the U.S. will be hammering them. It may be the economic equivalent of a nuclear attack.”
In the end, Vance won’t directly control any of this, but as an ardent proponent of Trump’s long-held desire to weaken the dollar, he would shore up an administration that is already moving in that direction — for better or for worse.
“Would a devaluation help the U.S. domestic economy?” Hirs said. “That’s iffy.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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