Weak Dollar, Strong Earnings: FX Tailwinds Fuel Q2 Results — Coca-Cola Among Winners

TradingKey - As more U.S. companies release their Q2 2025 earnings, a clear trend is emerging: the weaker U.S. dollar is helping to offset the negative impact of Trump’s tariffs on multinational corporations — creating a favorable chain reaction of currency tailwinds, stronger earnings, and rising stock prices.

So far in 2025, the U.S. Dollar Index (DXY) has declined by about 10%, marking the worst first-half performance in over half a century.

Analysts note that a weaker dollar boosts earnings for U.S. multinationals in two key ways:

• It increases the dollar-denominated value of overseas revenues
• It improves the competitiveness of U.S. exports

This foreign exchange advantage is helping to counterbalance the cost pressures from higher tariffs on imported goods.

FX Gains Lift Multinational Earnings

According to Reuters, recent Q2 reports from Levi Strauss (LEVI), Netflix (NFLX), PepsiCo (PEP), and 3M Company (MMM) all highlighted a common theme: weaker dollar boosted profits or led to raised full-year guidance.

On Tuesday, July 22, Coca-Cola (KO) reported Q2 earnings that beat both revenue and adjusted EPS expectations. The company also raised its full-year adjusted EPS growth forecast from 2–3% to 3%, citing favorable foreign exchange movements.

During the earnings call, Coca-Cola’s CFO said the company has seen positive impacts from currency fluctuations, and that more benefits are expected in the coming months.

Trump’s Plan and the Weaker Dollar Effect

As one portfolio manager noted that the whole point of Trump’s economic plan — including tariffs — is to weaken the dollar and boost U.S. multinational sales abroad.

According to LSEG, for every 1% decline in the dollar, S&P 500 earnings per share rise by 0.6 percentage points. S&P 500 companies generate about 38% of their revenue internationally

Goldman Sachs estimates that a 10% depreciation in the dollar translates into a 2–3% boost in EPS for the index — a dynamic that was evident during the 2017–2018 period of strong earnings growth.

Magnificent 7 Poised to Benefit

With the "Magnificent 7" tech giants set to report earnings starting this week, Goldman Sachs expects them to see notable FX tailwinds.

The technology sector is the only one in the S&P 500 where over half of revenues come from outside the U.S. — and the Mag 7 collectively have nearly 50% exposure to overseas markets.

Risks Remain

Despite the current benefits, risks persist:

• A weaker dollar may dampen domestic demand
• An unexpected rebound in the dollar could reverse gains
• Geopolitical and trade policy uncertainty remains high

For now, however, the weak dollar is a powerful ally for U.S. multinationals — and a key factor behind the strong start to earnings season.