Donald Trump can lead to the elimination of the dominant dollar position – convinces abroad Affairs magazine. That's what 3 experts said. This is Edward Fishman, Gautam Jain and Richard Nephew of the Center for Global Energy Policy at the University of Colombia. Fishman and Nephew worked at crucial U.S. administration offices.
As they point out, the dominance of the dollar has remained unwavering for many decades, despite various planet policies. This could change due to Donald Trump's fresh customs policy.
The authors recalled that the dollar became a planet reserve currency after the Bretton Woods conference at the end of planet War II. The conference led to the creation of the global Monetary Fund and the planet Bank and yet the full strategy of ties to the US dollar. The top crisis minute was Richard Nixon's 1971 decision to leave the gold parity, but the dollar besides survived it.
Today, about 50% of SWIFT transactions utilized by banks around the planet are in dollars – interestingly, 10 years ago it was 35 percent. Almost all over the world, dollar sales of oil, metals and many another commodities are denominated. A full of 54 percent of global commercial invoices usage the dollar, although the US is only liable for 10% of global trade.
Various countries tried to undermine the dominance of the dollar, specified as the Chinese. However, due to the plan of the Chinese financial system, the low marketplace openness, regulatory barriers to investment and akin problems, this is absolutely not successful. China has created its competitor for SWIFT, called CIPS – but CIPS has so far attracted only 0.2% of SWIFT's transaction volume.
A better chance of taking the dollar would be the euro, but the euro area has no single fiscal policy, and the largest country in the area, Germany, is reluctant to issue crucial amounts of bonds. The euro has its structural disadvantages and, combined with the geopolitical threat to Europe by Russia, there is no chance of assurance in the global financial planet in the euro.
According to authors in abroad Affairs, Donald Trump created the first real threat to the dominance of the dollar. The harm that this will origin will not be fatal for America, due to the fact that there is no clear alternate to the dollar position, but there will be a weakening of the position of the American currency.
"Distortions in the supply chain due to trade war, labour shortages due to deportations and general political uncertainty affect business and consumer sentiments, leading to lower spending, lower growth and lower interest rates. To a large extent, as a consequence of Trump's policy, European shares exceeded the US's leading stock index by almost 20 percent in the first 4th of 2025, which is the largest margin in over 3 decades," they wrote.
Entrepreneurs will not leave the dollar massively, but they can start investigating another options, which besides leads to a decline in assurance in the US caused by Trump's unstable policy. This may consequence in an increase in the popularity of the Chinese CIPS system, especially in those countries which, like Russia, will be severely affected by sanctions. According to the authors, much can depend on the state of the American judiciary under Trump. Today, companies like to go to U.S. courts in case of any disputes, due to the fact that they believe in his honesty. They do not believe in the same honesty of the courts in China, hence any reluctance to the Chinese currency. Trump's conflict with justice in the United States may in their opinion undermine this trust and make any entrepreneurs no longer respect the American strategy as far more credible than Chinese.
According to the authors, there is no historical necessity behind the dominance of the dollar. Everything depends on political decisions. In the 19th century, the world's currency was the British pound sterling, but later its position weakened and yet disappeared. The dollar may besides weaken or fall altogether, which would bring serious losses to America and impoverishment to the world.
Source: foreignaffairs.com
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