- Trump proposes 100% tariffs on foreign nations to combat de-dollarization and maintain the U.S. dollar’s dominance.
- Concerns about a weakening dollar arise due to American sanctions on Russia and high U.S. interest rates.
- Trump supports U.S.-pegged stablecoins to strengthen the dollar and prevent other countries, especially China, from gaining a competitive edge.
The 45th President of the United States and current candidate for the upcoming presidential election, Donald Trump just shared information regarding how his upcoming government would act against the threat of a less dollar-dependable world economy.
During a conversation with Bloomberg Editor-in-Chief John Micklethwait at the Economic Club of Chicago, Trump discussed his economic agenda, including his support for tariffs, his views on the Federal Reserve, and his strategy for dealing with China.
One of the most interesting takes in the interview, the president spoke about a recent trend in the global economy regarding Nations letting off the U.S. Dollar when trading with other nations.
When asked what he would do to stop the trend and keep the U.S. dollar as the world’s reserve currency – Trump mentioned that he would threaten other nations with a 100% tariff on every product sold into the United States.
While the aggressive stand would certainly fall in line with Donald Trump’s protectionist first tenure as President – reality implies that such measures could lead to significant economic repercussions.
A 100% tariff on imports could backfire by starting a retaliatory trade war, which could result in higher consumer prices and even undo every effort made to control American inflation over the past couple of years.
That is not to say that the potential next President wouldn’t take action against the de-dollarization of foreign trade – only that a 100% tariff seems like an extreme measure that could have unintended consequences.
Is The Dollar Losing Value?
Speculations of a weakening dollar have been gaining weight in recent years – particularly after American sanctions on Russia following the Ukraine conflict led other nations to become less timid about their intentions of letting go of the dollar dependency.
Several reports of countries like Brazil, Argentina, and Bolivia have started trading with China in Yuan. Even America’s longtime partner Saudi Arabia began accepting trade in other currencies.
Adding to that, the current state of American interest rates adds another layer to the potential weakening dollar. As rates remain high, U.S. exports become less competitive – which prompts nations to look for alternative currencies.
However, today there is no factual threat to the dollar as the entire world remains dependable on U.S.-issued currency. The International Monetary Fund (IMF) records that the greenback accounts for nearly 60% of global reserves – a far cry from the second-place Euro at 20%.
Trump’s Crypto Strategy: Strengthening the Dollar Through Stablecoins
Interestingly, Donald Trump’s strategy for creating a stronger U.S. Dollar also covers cryptocurrencies. During recent remarks about WorldLibertyFinance, the former President went on to say that he intends to make the U.S. the “crypto capital of the planet.
He advocates that U.S.-pegged stablecoins could help ensure the fiat currency remains a dominant force. This strategy directly aligns with his worries regarding a weakening greenback and its less-prevalent use in foreign trade.
He also believes that embracing crypto and Bitcoin technology will prevent other countries, particularly China, from gaining a competitive edge.
