US President Donald Trump vowed to put an end to the de-dollarization initiative kick-started by developing countries to protect the dollar. The President threatened import tariffs on anyone trying to sideline the US dollar for trade. He also imposed tariffs on Canada, Mexico, and China, and warned other countries that they could be next.
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The pressure mounted on developing countries by Trump is bringing the de-dollarization agenda to a screeching halt. Emerging economies are now considering using the US dollar for trade and pausing settling cross-border transactions in local currencies. “The idea of undermining the dollar is dead now,” said Trump to reporters at the White House.
De-Dollarization: Tariffs Saves the US Dollar
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Tariffs imposed on several countries are making them reconsider de-dollarization and use the US dollar for trade. Trump’s tirade on developing countries came after he won the election in November where he threatened to impose 100% tariffs. Though he has not pressed 100% tariffs on goods entering the US, they range between 10% to 25%.
Trump made it clear that developing countries need to be committed to the US dollar and ditch the de-dollarization agenda. “We are going to require a commitment from these seemingly hostile Countries,” he said on Truth Social. “They will face 100% Tariffs and should expect to say goodbye to selling into the wonderful US Economy. They can go find another sucker Nation. Any Country that tries should say hello to Tariffs, and goodbye to America!”
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The sharp statement from Trump put a dent in the de-dollarization initiative and made the US dollar’s hegemony remain intact. Steering away from the greenback could prove costly as tariffs will severely impact the imports and exports sector. It could also lead to price rise for businesses making it costly to conduct business in the US. The move will make the USD climb up the currency ladder and pull local currencies down.