For example, from early 2002 to early 2004, the dollar's exchange rate against the euro and sterling, on average, declined about 30 percent, yet dollar prices of imported manufactured goods from the European Union rose by only 9 percent, slightly more than dollar prices of U.S. manufactured goods during the same two years.
The consequence of the relatively small rise in the dollar price was a significant compression of gross operating profit margins on European exports to the United States.