Here's an unusual perspective, perhaps even a naive one, from someone who works primarily with technology and systems, not macroeconomics.
Lately, I've been observing the global reaction to U.S. tariffs, and something keeps nagging at me: while headlines focus on trade wars and political statements, there's a quieter, more calculated game playing out behind the scenes, currency devaluation.
I'm not an economist. I'm a tech guy who understands logic, patterns, and system responses under pressure. I might be wrong or oversimplifying, but based on my observations and historical patterns, here's how I see things unfolding:
Let's start with the basics. When the U.S. imposes tariffs, say 50% on Brazilian imports, these measures are designed to make those goods more expensive for American buyers, encouraging them to "buy American." However, this cost increase doesn't happen in isolation. Currency markets continuously adjust, and this is where it gets interesting.
Consider this scenario: Brazil doesn't retaliate with its own tariffs. Instead, it allows its currency, the Real, to slide from 5 to 6 Reals per dollar. This subtle move can effectively neutralize a significant portion of the tariff because American buyers now get more value for their dollar. Those Brazilian shoes, coffee beans, or auto parts? They become cheaper in dollar terms again, despite the tariff.
What appears to be a blow to Brazil's exports is actually being quietly cushioned through foreign exchange adjustments.
Now, let's apply this same perspective to India. Over the past year, the rupee has gone from around ₹81 to ₹84+ per dollar. This isn't a headline-grabbing change, you won't see national addresses about it, but it's not random either. It makes Indian exports more competitive. Global customers paying in USD effectively get more for less. Whether it's software services, pharmaceuticals, or textiles, that 3–4% drop in the rupee creates a pricing buffer that helps absorb shocks from tariffs, global inflation, or demand slowdowns.
But here’s another angle that caught my attention recently. The U.S. dollar has actually fallen about 10% against the Euro. That means, even as the U.S. considers or imposes tariffs, European buyers now find U.S. goods cheaper, because the Euro is stronger. So ironically, while U.S. tariffs are designed to "protect" its domestic producers, the weak dollar has made their goods more attractive abroad anyway.
And maybe, just maybe, that’s part of the calculus. Could it be why the U.S. is being more cautious with counter-tariffs from other countries? Because even with tariffs, the price advantage created by currency shifts makes U.S. exports competitive again? Maybe the underlying logic is: "Yes, we added a tariff... but due to the dollar drop, you're still getting a deal."
In tech terms, it's like having built-in fault tolerance, an automatic rebalancing mechanism that activates without user intervention.
This strategy has historical precedent. During the 2018–19 U.S.–China trade war, China allowed the yuan to depreciate in response to tariffs. This wasn't merely market reaction, it was strategic, … AND effective. Economists estimate that 30–50% of the economic impact of tariffs can be offset through currency movement alone.
But let me pause here, because there's a valid counter-argument.
Currency devaluation isn't a free lunch. It can trigger inflation, especially in countries that rely heavily on imports like fuel or electronics. A weaker currency makes these imports more expensive in local terms, hurting consumers and small businesses. It can also increase the cost of foreign debt repayments. It's a trade-off, not a magic solution.
There's also the risk of capital flight, investors seeing a weakening currency might withdraw funds to safer markets, causing financial instability. And if multiple countries start devaluing simultaneously, it becomes a race to the bottom, the infamous "currency war" scenario where nobody truly wins.
However, if executed subtly, with restraint and strategic timing, currency devaluation can function as a pressure valve. Not an escalation, but a silent recalibration.
So I say this with the humility of someone not formally trained in economics but trained to view systems holistically: currency devaluation resembles the economic equivalent of graceful degradation. It doesn't prevent the impact, but it absorbs the shock and maintains momentum.
And perhaps that's why some countries aren't loudly protesting U.S. tariffs. They're simply letting their currencies do the talking.
That's my perspective. I could be wrong. But from a technologist's vantage point, this is how it appears. Thoughts?