Trump’s Tariff Threat: A War Call to Save the Dollar

The possible loss of the dollar as the main international reserve or trade currency causes additional anxiety in the heart of the US government, administration, companies, and the global world order.

Listen to what former US President and Republican presidential contender Donald Trump recently said about the matter; do not rely only on my word for it. Emphasizing the need of strategically implementing and eliminating sanctions quickly to prevent negative effects on the dollar and its symbolic relevance, he underlined their negative impact on the value of the money. Trump underlined the vital need of keeping the dollar as the world currency and compared the possible loss of this position to a major loss equivalent to declaring a third world country.

The Republican presidential contender also revealed at a recent meeting his plan to levy a significant 100% tariff on goods coming from nations that stray from using the US dollar in foreign trade. Although at first look the justification for this choice seems unclear, a closer look explains why the United States cannot negotiate maintaining the dollar’s worldwide currency position.

In a quick historical perspective, the Bretton Woods agreement following World War II helped the dollar move to its position as world currency. The dollar was backed by a physical good — gold until 1971. But in 1971, President Richard Nixon broke off the dollar from the gold standard and converted it to a fiat money. The international reserve money…