As 2025 draws to a close, one of the biggest financial stories shaping markets is the weakening U.S. dollar. After years of relative strength, the greenback has lost nearly 10% against a basket of major currencies—its steepest calendar-year drop in more than two decades.

For Wall Street, that shift has created clear winners and losers. A Goldman Sachs index tracking 50 major U.S. companies with the highest share of overseas sales—names like Meta Platforms, Philip Morris, and Applied Materials—has surged 21% this year, far outpacing the S&P 500. In contrast, firms focused mainly on the domestic market, such as Target and T-Mobile US, have gained only about 5%. The gap between internationally and domestically oriented companies is now the widest since 2009.

But what do these movements mean for small and mid-sized businesses that don’t have ticker symbols?

Why the Dollar Is Falling

A mix of policy and perception drives currency values, and this year both have turned against the dollar. Falling U.S. interest rates, combined with uncertainty around trade and fiscal policy, have prompted investors to diversify into other currencies. Global funds have hedged their exposure to U.S. assets by selling dollars, putting additional downward pressure on its value.

The Federal Reserve recently signaled it may trim rates by another half-point before year-end, even as the European Central Bank pauses its easing cycle. Lower yields make U.S. assets less attractive to global investors, reducing demand for the dollar.

Winners and Losers

A weaker dollar helps companies that sell abroad. When U.S. multinationals convert their foreign earnings back into dollars, those profits are suddenly worth more. It also makes American products cheaper for foreign buyers, giving exporters a competitive edge.

That’s why large, globally diversified corporations—from technology to consumer goods—are thriving. Microsoft, for example, expects currency shifts to boost revenue growth by roughly two percentage points next year if rates hold steady.

Domestically focused businesses face the opposite effect. They don’t benefit from stronger foreign sales, and many import goods or materials priced in other currencies. For them, a weaker dollar means higher input costs and thinner margins.

“When the dollar weakens, it reshapes the competitive landscape,” said George Pearkes, macro strategist at Bespoke Investment Group. “Exporters gain momentum abroad, while domestically focused firms face tougher margins and rising import costs.”

What This Means for Small Business Owners

Even if your business doesn’t trade internationally, a declining dollar still affects your bottom line. Here are four key ways—and how to prepare:

1. Imported Goods Become Pricier

If your products or materials come from overseas, expect higher prices. Review supplier contracts, look for alternative domestic sources, or consider locking in exchange rates with your vendors where possible.

2. Exporters Gain a Price Advantage

U.S. manufacturers and producers who sell abroad can gain a powerful tailwind. If you’ve been considering entering foreign markets, this could be an ideal time to explore export assistance programs or partner with distributors abroad.

3. Inflation Pressures May Rise

A weaker dollar can make imported consumer goods—from electronics to raw materials—more expensive, nudging inflation higher. Keep an eye on pricing strategies and communicate clearly with customers if costs rise.

4. Investment and Capital Markets Shift

When the dollar falls, foreign investors may favor U.S. equities and real assets. That can boost stock prices but also make borrowing conditions more volatile. Businesses relying on credit should monitor rate trends closely.

Beyond Currency: Broader Market Implications

Not all of the market’s divergence is currency-driven. The ongoing artificial-intelligence boom, for example, has amplified gains for tech firms with global operations. Still, the weak dollar remains a major dividing line between multinational strength and domestic strain.

For small manufacturers, exporters, and regional service providers, the lesson is to think globally even when operating locally. Whether through sourcing, pricing, or partnerships, exposure to international markets can act as both a hedge and a growth lever.

Final Thought

The dollar’s decline isn’t just a Wall Street story—it’s a Main Street signal. Currency shifts influence everything from supplier costs to customer demand to competitive positioning. Businesses that understand these ripple effects can adapt faster, protect their margins, and seize new opportunities abroad.

In an interconnected world, global awareness is no longer optional—it’s a competitive advantage.