How the U.S. Dollar’s Currency Exchange Rate is Impacting American Online Small Businesses

Puzzle made up of money from different countries – representing US dollar currency exchange rate and how it impacts international selling and online businesses

The U.S. dollar is an important and trusted currency around the globe, with its value having a direct effect on the international trade of most countries. This means the currency exchange rate and the rise of the U.S. dollar have substantial implications for the global economy, and in particular, U.S. businesses selling across international borders.

The strong dollar is currently impacting profits for U.S. online small businesses that export, manufacture and sell worldwide, causing many SMBs to rethink their international selling strategies.

graph detailing annual change of US trade in US dollars-online small business

How is the U.S dollar’s currency exchange rate impacting online small businesses? It is making products shipped from the U.S. more expensive in some international locations. So, due to the growth of the dollar, American goods can cost as much as 20 percent more overseas.

In addition, as the dollar price goes up substantially for global customers, it opens up the opportunity for competitors, who are native to these foreign markets, to offer similar products for a lower price.

According to Campbell R. Harvey, a professor at the Duke Fuqua School of Business and founding director of the Duke University/CFO Magazine Global Business Outlook Survey, “U.S. exporters are being punished by these competitive depreciations and this will lead to lower profits and less employment.” Markets such as Canada have been hit hard as the Canadian dollar weakens. The Canadian dollar sank to an 11-year low against the U.S. dollar just last month, with the loonie standing at 75.27 U.S. cents. For Canadians, a low dollar means that most consumer goods are more expensive – everything from imported produce to back-to-school clothing and international vacations. And for U.S. businesses selling to Canada, it means their products are now more expensive for Canadians and potentially a lot less attractive for residents of Canada (and other countries) that have a weakening currency against the U.S. dollar (The Globe and Mail).

Chad Moutray, chief economist at the National Association of Manufacturers, said, “The dollar is strengthening in many ways for the right reasons. It will present a challenge in terms of growing exports, but at least the U.S. economy is getting better.”

This trend is expected to continue for some time, and U.S. businesses with significant international sales will continue to feel the effects of the strengthening dollar. That means that as online small businesses, you have to consider lowering prices or just work that much harder to keep foreign customers from straying to local competitors with better deals.

So, how do you keep your international customers coming back? Tell us in the comments!

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