Trump’s economic policies have made de-dollarization threats much more severe as his administration works to diminish the dollar’s…

Trump’s economic policies have made de-dollarization threats much more severe as his administration works to diminish the dollar’s traditional global financial dominance. At the moment of writing, the dollar’s status as the world’s reserve currency faces accelerated decline because of the April 2 2025 aggressive tariff announcement and other controversial actions taken by the Trump administration.

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The Impact of Trump’s Tariffs, Global Trade Disruptions, and the Dollar’s Decline

Trump’s Tariff Strategy Undermines Dollar Stability

Trump’s new tariffs targeting U.S. trading partners have created unprecedented global trade disruption. Financial experts view this de-dollarization policy as an attempt at weaponizing economic advantages, which could lead to serious consequences.

Edward Fishman, Gautam Jain, and Richard Nephew stated:

“Combined with Trump’s attacks on the rule of law, his clumsy, erratic attempts to weaponize Washington’s economic advantages pose the greatest threat so far to the dollar’s status as a reserve currency.”

The dollar initially strengthened as interest rates rose, but such market uncertainty has since contributed to a significant dollar decline against major currencies, and also created volatility in financial markets worldwide.

Allies Face Harsher Treatment

The current tariff structure penalizes U.S. allies more severely than adversaries, which has damaged trust in U.S. economic leadership. This de-dollarization Trump approach threatens traditional currency reserve relationships that have existed for decades.

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Sanctions Push Nations Toward Alternatives

At the time of writing, as Trump ramps up pressure against Iran and Venezuela, more countries under sanctions feel motivated to reduce dollar reliance. China’s Cross-Border Interbank Payment System (CIPS) offers an alternative to SWIFT for international transactions amid growing global trade disruption and uncertainty in world markets.

Rule of Law Concerns

Perhaps the greatest threat to dollar dominance comes from challenges to the rule of law. “De-dollarization Trump policies risk eroding foreign investor confidence in dollar-denominated assets, which investors have historically considered extremely safe investments.

Potential Consequences

Fishman, Jain, and Nephew warned:

“The result of the dollar’s decline will be higher costs, more complicated trade, and reduced living standards—at least until another currency comes along to replace it.”

They further concluded:

“Choices, not destiny, determine reserve currencies; if the dollar is finally dethroned, it will be a disaster of the Trump administration’s own making.”

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The historical precedent of the British pound’s decline demonstrates that currency reserve status can indeed be lost through economic and political missteps, making de-dollarization threats from Trump’s policies a genuine concern for dollar decline and global economic stability.