In the second term of Donald Trump’s presidency, his aggressive and unpredictable tariff policy could trigger tectonic shifts in the global economy, jeopardizing the US dollar’s status as the world’s leading reserve currency.
In his first cadence, Trump already demonstrated a penchant for harsh protectionism: trade wars with China, duties on steel and aluminum, and pressure on allies on trade issues. In his second term, Trump’s rhetoric has become even more aggressive, increasing tariff barriers. This could lead to a global reassessment of the US’s role in global trade and the financial system.
Tariff Aggression Is an Incentive for De-Dollarization
With high tariffs and economic instability, other countries will look for ways to minimize their dependence on the US market and currency. Consequently, bilateral and multilateral trade agreements in national currencies will intensify, bypassing the dollar.
Although the US dollar’s share of global financial trade is still leading (about 49% according to SWIFT), the US dollar has declined sharply in recent weeks due to low demand for currencies in the form of the imposition of tariffs by Trump and his administration. This could very quickly reduce the US dollar’s share of international remittances.
At the same time, the share of the Chinese yuan is steadily increasing, especially in trade between countries in Asia, Africa, and Latin America. According to preliminary data, the share of the US dollar in the global system fell sharply with the introduction of tariffs in early April 2025 (42-45%), while the share of the Chinese yuan rose to 5-6%. For this reason, the dollar index fell sharply in April 2025, falling below 100 amid decreasing demand for the currency.
Trump’s “Threat for a Deal” Strategy and Its Risks
Trump expects that by threatening new tariffs, he will be able to push his partners to make concessions and achieve a compromise deal. According to his logic, any country is interested in trade with the US, so threats will lead to a desire to find common ground.
However, this could be a strategic mistake. Asian states are already activating their trade alliances: a recent meeting of representatives of China, South Korea, and Japan showed their readiness to deepen regional cooperation independently of Washington. If the US continues to play the tariff card, partners may prefer to do without American goods, from smartphones to cars.
The world can adapt without iPhones and Chevrolets, switching to alternative brands with comparable quality and lower prices. As a result, US consumers will face the opposite effect: manufacturers will raise domestic prices to compensate for the loss of the export market, which will hit the pockets of US citizens themselves due to more expensive labor and raw materials.
Increasing Hostility Between the US and China
One of the key risk factors will be a deepening trade confrontation between the US and China. New sanctions, tariff wars, and investment restrictions could significantly slow global economic growth.
According to IMF estimates, in the event of a large-scale trade war between the US and China. Global GDP could lose up to 0.8% annually, and global trade would decline by 2-3%.The disruption of global supply chains, increased political uncertainty, and rising transaction costs will lead to a long-term decline in growth in both developed and developing economies.
Opportunities for BRICS and the RMB
The BRICS group has become a major political force in the last two decades, building on its desire to counterweight Western influence in global institutions. As of today, BRICS already includes 10 countries.
BRICS member states as of April 2025:
- Brazil
- China
- Egypt
- Ethiopia
- India
- Iran
- Russia
- Indonesia
- South Africa
- United Arab Emirates
BRICS countries on the map:
At the 2023 BRICS summit in South Africa, BRICS announced the admission of Saudi Arabia, Iran, the United Arab Emirates, Egypt, Ethiopia, and Argentina as new member states. Soon after he became president of Argentina, Javier Milei announced that his country would not join the organization, while the other countries became members in 2024. Saudi Arabia has not formally joined BRICS. Indonesia joined the bloc as a full member on January 6, 2025. (The informal name BRICS+ is sometimes used to acknowledge the organization’s expansion.) The group’s expansion in 2023 exemplifies its growing heft but also brings new disagreements on issues such as Russia’s invasion of Ukraine.
Against this backdrop, the BRICS+ countries are actively working to develop alternative financial mechanisms:
- Expanding the use of national currencies in trade within the bloc.
- Creation of alternative payment systems.
- Initiatives to issue a common settlement currency for the BRICS+ countries.
China, in particular, is actively promoting its currency through the “One Belt, One Road initiatives,” expanding the yuan’s circulation area in developing regions.
Implications for the US and the Global Economy
The loss of the dollar’s status as the world’s non-alternative currency has dire consequences for the US:
- Lower demand for US Treasury securities will drive up yields and increase the burden on the US budget.
- Alternative payment systems will allow dollar settlements to be circumvented.
- A weaker dollar will make imports more expensive and increase domestic inflation.
The world economy as a whole will become more fragmented, increasing costs, reducing the efficiency of global trade, and making international markets more volatile.
Balance of Power Is Changing
In Donald Trump’s second term, aggressive tariff policies and escalating trade wars could trigger profound changes in the global financial architecture. The process of de-dollarization, the strengthening of the yuan, and the formation of regional currency blocs will inevitably change the balance of power. Historical experience shows that domestic mistakes weaken currency dominance — and Trump’s protectionism may be just such a mistake, leaving a long-term mark on the global economy.