One argument is that a weak dollar will make U.S. products imported by foreign countries cheaper, which will increase the demand for U.S. exports. In addition, a weaker dollar may discourage U.S. firms from importing foreign products because the cost will be higher. Both factors result in a smaller balance-of-trade deficit. However, a weak dollar might not improve the balance-of-trade deficit because it is unlikely to weaken against all countries simultaneously. Foreign firms may compare the price they would pay for U.S. products to the price paid for similar products in other countries. Even if the dollar weakens, products produced in China or some other countries where there is cheap labor may still be cheaper for customers based in the United States or other countries.
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