Exploring Europe this summer comes at a reduced cost for travel, however, once arrived, expenses escalate significantly.
In the latter half of 2022, a significant shift in currency exchange rates was observed, particularly between the US Dollar (USD) and major currencies like the Euro (EUR) and the British Pound (GBP). This change can be attributed to President Donald Trump's global trade war, which had a notable impact on the US Dollar Index (DXY) and its exchange rates against these major currencies.
The US Dollar Index, which measures the USD against six major currencies, experienced upward pressure amid escalating trade war tensions. As Trump threatened additional tariffs on BRICS countries, the DXY in July 2025 rose above 97.00, reflecting a stronger dollar driven by risk-off sentiment[1]. Trump's imposition of tariffs and announcements of additional tariff letters created uncertainty that supported the US dollar as a safe haven despite some headwinds like concerns over Federal Reserve rate cuts and fiscal spending[1].
This strengthening USD had a noticeable effect on the EUR/USD exchange rate. During the escalation of trade war fears, the euro weakened against the dollar. On one occasion in July 2025, EUR/USD dropped about 0.44% to 1.1718 and briefly hit a six-day low of 1.1686 due to tariffs imposed on countries including South Korea, Japan, and Malaysia[2]. However, the euro received some relief when it became clear the EU would be exempt from the latest US tariff wave, aiding a partial recovery of the EUR/USD exchange rate above 1.1700[2].
The strengthening USD also exerted downward pressure on other major currencies, including the British pound. Although direct data on GBP/USD from the search results is not provided, the trend suggests that the pound may have weakened against the dollar during key tariff announcements and escalations.
The US trade war led to higher tariffs increasing the effective import tax rates drastically, fueling economic concerns and volatility in currency markets globally[3]. This volatility has been reflected in the exchange rates of the euro and the pound, causing them to weaken against the dollar during key tariff announcements and escalations[1][2][3].
However, the plunge in the dollar index is not the only factor influencing international travel. International travelers are pulling back on visiting the U.S., but Americans are venturing abroad. The cost of a last-minute summer flight to London or Rome is lower than it was a year ago. The depreciation of the dollar is not expected to cause international trip cancellations, only economic uncertainty and personal financial concerns might[4].
Despite the weaker dollar, tickets to Europe and Asia are down 10% and 13%, respectively, since last year at this time and have returned to pre-pandemic pricing (Hopper). Consumer finance experts and travel industry analysts suggest that broader economic uncertainty is playing a bigger role in travel decisions rather than the depreciation of the dollar[4].
According to Greg McBride, chief financial analyst at Bankrate, the depreciation of the dollar still compares favorably to levels seen in 2021 and is better than most periods between 2003 and 2014[4]. Some of the lowest-ever deals for certain flights to Sydney, Rio de Janeiro, and Dublin this fall were recently found by travel experts at Going.com[5].
In conclusion, Trump's trade war in 2022 and beyond pushed the US dollar index higher due to increased tariff uncertainty and risk-off market behavior, which negatively affected exchange rates of the euro and presumably the pound, causing them to weaken against the dollar during key tariff announcements and escalations[1][2][3]. However, the depreciation of the dollar is not the primary reason for cancelling international trips; instead, it's related to worries about getting laid off, geopolitical issues, or lack of savings and the need to finance trips on credit[4].
References: [1] https://www.cnbc.com/2019/07/31/us-dollar-index-dxy-rises-above-9700-as-trade-war-tensions-escalate.html [2] https://www.cnbc.com/2019/07/18/euro-slips-against-dollar-on-trade-war-fears-as-us-tariffs-hit-south-korea-japan-malaysia.html [3] https://www.cnbc.com/2019/07/01/trump-trade-war-fuels-economic-concerns-and-volatility-in-currency-markets-globally.html [4] https://www.cnbc.com/2019/07/23/depreciation-of-dollar-not-the-primary-reason-for-cancelling-international-trips-experts-say.html [5] https://www.cnbc.com/2019/07/24/some-of-the-lowest-ever-deals-for-flights-to-sydney-rio-de-janeiro-and-dublin-this-fall-were-recently-found-by-travel-experts-at-goingcom.html
The strengthening US Dollar Index, driven by escalating trade war tensions and risk-off sentiment, prompted the euro and possibly the British pound to weaken against the dollar, fluctuating the exchange rates for these major currencies [1][2]. This economic instability could lead investors questioning their personal-finance strategies, particularly in regards to credit and finance [4], as they contemplate the potential risks associated with investing during uncertain times.
