Geopolitical Economy Report US dollar dominance could end very fast, warn top economists. This is how
Aug 27, 2025
The decline of the US dollar's dominance is gaining momentum, with economists surprising even mainstream voices speaking out. Trump's policies may cause a swift transition toward de-dollarization amid geopolitical shifts. As the dollar's role diminishes, the rise of China's influence and increasing gold purchases by central banks come into play. Concerns over inflation and US Treasury market volatility further complicate the landscape, and tensions surrounding interest rates are adding pressure as foreign investments dwindle.
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Trump Accelerated An Existing Trend
- De-dollarization predates Trump but his policies accelerated it markedly in 2025. Investors and countries are actively seeking alternatives to dollar assets amid policy-driven uncertainty.
Mainstream Economist Warns Of Dollar Rout
- Barry Eichengreen, a mainstream economist, now entertains a rapid dollar rout as plausible due to U.S. policy chaos. He warns a sudden loss of foreign willingness to hold dollars could destabilize Treasuries and financial institutions.
Official Reserves Show Steady Dollar Decline
- Official dollar reserve shares fell from ~70% (2000) to under 58% by early 2025. Some central banks likely hold non-disclosed non-dollar reserves to avoid Western seizure risk.