Trump’s “Liberation Day” tariffs aimed to crush trade deficits and flex US power. But they might speed up dedollarization instead.
The EU (20%), Japan (24%), and India (26%) are bristling, while Canada and Mexico (25%) eye new trade partners like China. Geopolitically, trust in US leadership frays as nations hedge against dollar reliance.
🔸According to Tax Foundation, imports could drop $800 billion in 2025, cutting dollar demand.
🔸China’s yuan trade surges (up 4% since 2016)
🔸US Dollar Index is down 4.7% this year.
🔸China retaliated 15% on US coal. EU countermeasures tighten the squeeze.
Investors holding $27 trillion in US debt might balk as 10-year yields dip to 4.027% (last week), hinting at a confidence crisis. BRICS, dodging Trump’s 100% tariff threat, push non-dollar trade—Russia-China’s already at 95%.
Trump’s IEEPA “emergency” frames tariffs as sovereignty. But by weaponizing trade, he might cede geoeconomic clout to rivals. Looks like the dollar dominance is doomed, and Trump is paving China’s rise.
