Unhedged The Economics Show: Trump is accelerating the dollar’s decline
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Aug 5, 2025 
Kenneth Rogoff, a Harvard economics professor and former IMF chief economist, joins Martin Wolf to discuss the declining influence of the US dollar and its implications. Rogoff argues that Trump's trade policies are accelerating this trend, potentially empowering China. They explore how the shift in currency dynamics could lead to capital flight from the US and why cryptocurrencies pose a greater threat to dollar dominance than commonly believed. They also touch on the history of trade protectionism and the fragility of the current economic landscape.
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Dollar's Gentle Decline Accelerated
- The US dollar has been in gentle decline since around 2015, losing some of its dominant position.
- Donald Trump's policies have acted as an accelerant, hastening the decline and empowering rivals like the euro and renminbi.
Global Frustration with Dollar
- Many countries, including China, are growing frustrated with US dollar dominance and its leverage via sanctions.
- China's experience with US policy actions, like those against Russia, pushes it and others to rethink their dollar holdings.
Indicators of Dollar's Peak Past
- Several measures show the dollar peaked around 2015 and has weakened since, including reserve holdings, trade invoicing, and foreign exchange stabilization.
- The dollar's dominance remains but is declining, while alternatives like the euro and renminbi gain relative importance.
