Source: Jinshi Data

The shock wave caused by President Trump to U.S. allies and trading partners has also triggered doubts about U.S. assets (including the US dollar). While the U.S. dollar is unlikely to lose its position as the global dominant currency in the near term, new doubts are emerging as the world weighs the reliability of the United States' future.

At present, the US dollar remains the dominant currency in global reserves and transactions, which allows the United States to enjoy what is called "excessive privilege." However, since Trump took office, his attitude towards traditional allies and trading partners has been shocking. He said the United States may not provide assistance if NATO members do not pay more for defense.

David Roche of Quantum Strategy declared earlier this month: "NATO is dead" and added that "no one will trust the U.S. treaty." Therefore, he pointed out that the yen has now become the new safe-haven currency, replacing the dollar's status.

Suspicions of the U.S. fulfilling NATO commitments have also prompted Canada and Portugal to reconsider whether to buy U.S. F-35 stealth fighter jets, while Europe is launching a massive military expansion plan.

In addition, Trump insists that Canada and Greenland be part of the United States, not to mention the tariffs he imposed on Canada and Mexico—even though during Trump’s first term, the United States signed a trade agreement with neighboring countries.

Mr. Trump has made it clear that the signature of the U.S. on any document is meaningless now, whether it is the U.S.-Mexico-Canada Agreement (USMCA, an agreement negotiated by Trump himself), the North Atlantic Treaty Organization, the Columbia River and the Great Lakes water treaty, or the U.S.-Canada border agreement that was resolved decades ago," Philip Cross, a senior researcher at the Macdonald-Laurier Institute, wrote in a commentary article this month in the Wall Street Journal. Barry Eichengreen, professor of economics and sciences at the University of California, Berkeley, has been studying the dollar for many years. He believes that ally relations are crucial to currency.

In a recent article published in the Financial Times, he warned that “if the United States is believed to have betrayed its allies, the dollar’s ​​global status will be affected.”

He pointed out that throughout history, countries tend to use partners’ currencies as reserve assets and means of payment. For example, in the 1960s, Germany and Japan supported the dollar and helped maintain their global status as they valued defense agreements with the United States.

Even today, the US dollar still accounts for a disproportionate share of the allies' foreign exchange reserves.

Aiken Green added: “Ultimately, the fate of the dollar will depend on whether the U.S. leaders are willing to uphold the rule of law, respect the separation of powers, and fulfill theCommitment to foreign partners. ”

Wall Street began to think about the impact of a new geographic pattern on the future value and status of the dollar.

Rabobank strategist Jane Foley recently stated in a report that Trump’s trade war, withdrawal from the military alliance and mergers to Canada and Greenland “may accelerate the de-dollarization trend and weaken the value of the dollar,” Bloomberg cited his analysis.

Deutsche Bank chief foreign exchange strategist George Saravelos also warned that the risk of the dollar losing its position as a safe-haven currency “need to be seen as a possibility” when market pricing reflects the new world order.

The White House has not responded to the request. Although Impressed by the hope of improving the U.S. trade balance with a weak dollar, but both Trump and Treasury Secretary Scott Bessent said the dollar must maintain its dominance.

This confidence crisis has spread to central banks that are usually independent of pressure. In fact, some ECB and regulatory officials privately question whether the Fed's role as "lender of the last" can still be trusted, according to Reuters.

While they believe the possibility that the Fed will refuse to perform this duty is extremely low, officials have already discussed the U.S. The Fed declined to comment and showed no signs of not providing dollar financing in the crisis. As for Trump, he said he would not fire Powell, and Powell also said the president had no right to fire him.

Of course, doubts about the future of the dollar are not uncommon. Moody's warned last week that the U.S. debt has been at a high level, a situation that has lasted for decades and could offset the "unique and central role of the dollar and U.S. Treasury in the global financial system."

The West The sanctions imposed on Russia over the Russian-Ukrainian conflict have prompted others to reduce their dependence on the dollar and diversify by increasing other assets such as gold.

Last year, the author of the book "Black Swan" Nassim Nicholas Taleb has also raised this concern. He warned that these sanctions are one of the biggest financial mistakes of the 21st century.

At the same time, central banks and consumers around the world are still buying gold in large quantities. Gold prices have doubled since 2022, soaring to above $3,000 per ounce. Analysts at Bank of America predict that the trend will continue and expect gold to reach $3,500.

They wrote in a recent report: "Of course, there is another question, if the United States becomes more internally closed, will countries still have the motivation to continue to use the dollar as their main currency? The accompanying concern is whether ‘America First’ will evolve into ‘America isolation’, thereby further diversifying foreign exchange reserves. ” They added that gold will be the biggest winner.