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At a rally in Wisconsin, the US presidential candidate Donald Trump issued a stark warning to countries considering moving away from the U.S. dollar for international trade, a trend known as “de-dollarization.“ Trump pledged to impose a 100% tariff on any nation that shifts away from the dollar, intensifying his protectionist trade platform. He emphasized that abandoning the dollar would effectively mean losing access to the U.S. market, making it financially unfeasible for such countries to continue business with the United States. Trump framed his stance as a defense of the U.S. dollar, which he claimed has been “under major siege“ in recent years. The former president expressed concern over the growing discussions among nations like China, India, Brazil, Russia, and South Africa about conducting trade in currencies other than the U.S. dollar. At a summit last year, these countries explored ways to reduce reliance on the dollar, a development Trump aims to counter aggressively. He reiterated his desire to maintain the dollar as the world's dominant reserve currency, despite the decline in its global dominance over the last few decades. While the U.S. dollar still accounts for nearly 60% of global foreign exchange reserves, there are growing concerns about countries looking for alternatives. Trump's harsh approach to tariffs is designed to halt this shift, but some analysts warn of potential negative consequences. Ulrich Leuchtmann, head of foreign exchange research at Commerzbank AG, cautioned that Trump's proposed tariffs could backfire, incentivizing more countries to abandon the dollar and causing major disruption to global markets. This could ultimately weaken the dollar’s safe-haven status and trigger a significant depreciation of the currency.
