Goldman Sachs has recently issued a research report that offers a pessimistic outlook on the dollar, predicting that with escalating global trade tensions, increasing policy uncertainties, and slowing US economic growth, the dollar will face significant devaluation pressure. This view directly challenges the "American exceptionalism" logic that has supported the dollar's strength in recent years.
The Dollar's Devaluation Trend is Emerging, Goldman Lowers Expectations for Major Currencies
The report noted that by the first quarter of 2025, the US dollar has shown signs of weakening against most major currencies, and this trend is expected to continue. Goldman specifically predicts: the dollar will decline by about 10% against the euro, and by 9% each against the yen and the pound. The bank believes that US assets no longer have a distinct return advantage compared to other economies, and the valuation foundation of the dollar is being eroded.
Corporate Earnings and Consumption Under Pressure, "American Exceptionalism" Weakens
Goldman emphasized in the report that the key to attracting global capital to the US has been its corporate profitability and macro stability. However, now the broad and unilateral tariff policies are eroding this advantage. Goldman states: "If tariffs squeeze American corporate profits and reduce household real purchasing power, the support base for the dollar will no longer be solid."
The report also pointed out that because the US has become a "price taker," and with supply chains and consumers lacking short-term elasticity, the risk of dollar devaluation will further intensify.
Weak Overseas Demand, Capital Begins to Withdraw from US Markets
Apart from structural trade issues, Goldman warns that interest from overseas investors and consumers in US assets is significantly cooling. The report mentions that "overseas consumer resistance to American products" and "a decline in inbound tourism" are becoming factors that continuously weigh on GDP.
Goldman observed: "Recent foreign spending far exceeded expectations, while US asset performance has been weak, resulting in a notable outflow of funds." More alarmingly, foreign central banks have started reducing their dollar reserves, and Goldman warns: "If current policy disruptions persist, private capital may also begin to follow suit in withdrawing."
10% Universal Tariff Becomes a Market Focus
Commenting on the potential 10% universal tariff proposal, Goldman bluntly stated: "Although this policy has not yet been finalized, its political foundation is gradually taking shape." If implemented, this tariff would exacerbate inflationary pressures and could further depress the dollar exchange rate.
The report believes that the current market dynamics "to some extent, have already opened the door to a trade policy set that differs from Trump's first term."
The Dollar's "Safe Haven" Status is Being Reevaluated
From a macro perspective, Goldman's forecast reflects a trend change: the unique status of the dollar as a global reserve currency is undergoing a reassessment of trust. If future US policies continue to prioritize short-term political goals, the dollar exchange rate is likely to remain under pressure, and global capital may swiftly shift toward more stable asset classes.
