Is Trump’s Policy Risking the US Dollar’s Global Power?

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Jun 20, 2025

Could Trump's policies shake the US dollar's global dominance? Discover the risks, market impacts, and why gold is gaining traction...

Financial market analysis from 20/06/2025. Market conditions may have changed since publication.

Have you ever wondered what keeps the global economy ticking? For decades, the US dollar has been the backbone of international trade, a symbol of stability that countries and investors lean on. But whispers are growing louder: could recent US policies, particularly under Donald Trump’s administration, be putting this financial titan at risk? It’s a question that’s not just for economists in suits but for anyone with a stake in the markets—because when the dollar wobbles, the world feels the tremor.

The Dollar’s Throne: A Fragile Crown?

The US dollar isn’t just another currency; it’s the world’s reserve currency, a status that gives the United States an edge most countries can only dream of. From oil trades to international loans, the dollar dominates. But some of Trump’s economic advisors argue this dominance is a double-edged sword, blaming it for making American exports pricier and contributing to the decline of manufacturing. Is there truth to this? Perhaps a sliver, but as someone who’s watched markets for years, I’d argue it’s more about corporate choices than the dollar’s strength alone.

The dollar’s role as the global reserve currency is both a privilege and a responsibility—one that shapes markets worldwide.

– Financial analyst

Let’s break it down. The dollar’s strength means lower import costs and tame inflation for Americans. It also lets the US government borrow at rock-bottom rates because Treasuries—those US government bonds—are the go-to safe asset for global investors. But here’s the kicker: some in Trump’s circle see this as a burden, not a blessing. They argue it’s time to rethink the dollar’s role. Bold move or reckless gamble? Let’s explore.


Why the Dollar’s Strength Matters

The dollar’s dominance isn’t just about bragging rights. It’s a financial superpower. Countries stockpile dollars in their reserves, and nearly 90% of global transactions involve it, according to central bank data. This gives the US a unique ability to influence markets, from Wall Street to emerging economies. But when policymakers start questioning this setup, it raises eyebrows—and risks.

Imagine a world where the dollar isn’t king. Other currencies, like the euro or yuan, might step up, but they lack the liquidity and trust the dollar commands. A shift away from the dollar could spike borrowing costs for the US government and make life pricier for American companies. It’s not just theory—investors are already rethinking their heavy bets on US assets.

  • Lower borrowing costs: The dollar’s status makes Treasuries a safe bet, keeping US debt affordable.
  • Global demand: High demand for dollar-based assets boosts US markets.
  • Trade advantage: A strong dollar keeps imports cheap, curbing inflation.

Yet, some argue this setup hurts US competitiveness. Exports become expensive, and factories close. It’s a fair point, but blaming the dollar feels like an oversimplification when automation and global supply chains play massive roles too.

Trump’s Playbook: A Risky Shift?

Trump’s team seems convinced that shaking up the dollar’s role could revive American industry. Policies like tariffs and tax changes signal a broader push to prioritize domestic growth over global financial dominance. I’ve seen enough market cycles to know that bold moves can backfire. If the US pushes too hard, it risks alienating foreign investors who’ve long propped up its markets.

Policies that undermine confidence in the dollar could trigger a slow but seismic shift in global markets.

– Investment strategist

Take tariffs, for example. They’re designed to protect US jobs, but they could spark trade wars, driving up costs and rattling global confidence in the dollar. Then there’s the budget deficit—ballooning to levels that make investors nervous. If foreign demand for Treasuries drops, the US could face higher interest rates, squeezing everything from mortgages to corporate loans.

Here’s where it gets personal: I’ve always believed markets reward stability. Trump’s unpredictable style—while energizing for some—can spook investors who crave certainty. If the US seems willing to gamble its financial crown, the ripple effects could hit your portfolio, whether you’re in stocks, bonds, or even crypto.


Gold: The Dollar’s Quiet Rival

Amid this uncertainty, one asset is shining brighter: gold. Unlike the dollar, gold isn’t tied to any government’s whims. Central banks have been quietly boosting their gold reserves—down from 60% dollar holdings in the early 2000s to about 46% now, per recent data. Why? It’s a hedge against uncertainty, a safe haven when trust in currencies wanes.

Gold’s appeal isn’t just for doomsday preppers. It’s a practical move for investors worried about a dollar downturn. If Trump’s policies erode confidence, gold could soar as a reserve asset no one controls. I’ve seen this before—when markets get jittery, gold often steals the spotlight.

AssetKey BenefitRisk Level
US DollarLiquidity, global trustMedium (policy risks)
GoldIndependent of governmentsLow-Medium (price volatility)
TreasuriesSafe-haven statusMedium-High (rate hikes)

The table above sums it up: gold’s independence makes it a compelling bet in turbulent times. But it’s not a slam dunk—gold prices can swing, and it doesn’t pay dividends like stocks or bonds.

What’s Next for Investors?

So, where does this leave you? If you’re invested in US markets, it’s time to rethink your strategy. The dollar’s dominance isn’t vanishing overnight—no other currency matches its depth or liquidity. But cracks are forming. A gradual shift away from US assets could mean slower growth for stocks and higher borrowing costs.

  1. Diversify globally: Look beyond US markets to spread risk.
  2. Consider gold: A small allocation could hedge against dollar weakness.
  3. Watch policy moves: Tariffs and deficits will shape market sentiment.

Personally, I’m keeping an eye on emerging markets. They’re riskier, sure, but they could benefit if the dollar’s grip loosens. It’s not about panic—it’s about being proactive. Markets don’t reward complacency.


The Bigger Picture: A Shifting World

Let’s zoom out. The dollar’s role isn’t just about economics—it’s about power. A weaker dollar could reshape global alliances, trade flows, and even geopolitical stability. If foreign investors start doubting the US, they might turn to alternatives, from gold to other currencies. It’s a slow burn, not a collapse, but the stakes are high.

A currency’s strength reflects a nation’s credibility. Undermine that, and the consequences ripple far beyond markets.

– Economic historian

I can’t help but wonder: are we at a turning point? The US has enjoyed decades of financial dominance, but nothing lasts forever. Trump’s policies might accelerate a shift that’s already underway. For investors, it’s a wake-up call to rethink assumptions and prepare for a world where the dollar isn’t the only game in town.

This isn’t about fear-mongering. It’s about staying sharp. The markets are a story of adaptation, and those who read the signs early come out ahead. Whether it’s gold, global stocks, or a sharper focus on policy risks, now’s the time to act. What’s your next move?

Courage taught me no matter how bad a crisis gets, any sound investment will eventually pay off.
— Carlos Slim Helu
Author

Steven Soarez passionately shares his financial expertise to help everyone better understand and master investing. Contact us for collaboration opportunities or sponsored article inquiries.

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