Geopolitical Economy Report
Trump's tariffs turbocharge de-dollarization: World sells US dollar assets, seeking alternatives
May 4, 2025
Donald Trump's tariffs are backfiring, accelerating the global shift away from the U.S. dollar. Countries, particularly in BRICS, are selling off U.S. assets, seeking alternatives like gold and European bonds. Tensions are rising in East Asia as alliances between China, South Korea, and Japan strengthen amid U.S. trade threats. The fallout from these trade wars is shaking confidence in U.S. Treasury securities, paving the way for a multipolar currency world. The implications for U.S. economic policy and its financial markets are profound.
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Quick takeaways
- Trump's tariffs and trade policies, intended to strengthen the U.S. dollar, may paradoxically accelerate global de-dollarization as countries seek alternatives.
- The growing cooperation among countries like China and Japan, in response to aggressive U.S. economic measures, highlights a shift towards a multipolar currency world.
Deep dives
Trump's Commitment to Dollar Dominance
Donald Trump emphasizes the necessity of maintaining the U.S. dollar's status as the world's dominant currency. He proposed punitive measures, such as imposing 100% tariffs on countries that seek alternatives to the dollar. This stance reflects his belief that losing the dollar's reserve currency status would equate to a significant setback for the United States, comparable to losing a war. By publicly threatening economic repercussions, Trump aims to bolster U.S. currency strength but may inadvertently accelerate its decline.
