Donald Trump and his team are concerned about the de-dollarization trend that started gaining steam after the West unplugged Russia from the global financial system and seized its assets in 2022 over Moscow's special operation in Ukraine.
Washington's weaponization of the US dollar prompted developing economies to seek alternatives and switch to using national currencies in mutual trade. Russian Foreign Minister Sergey Lavrov announced on April 22 that Russia and China are completing the de-dollarization of bilateral economic relations, with more than 90% of mutual payments made in national currencies. Earlier, the minister pointed out that it wasn't Russia who pulled the trigger for de-dollarization but the US and its allies who started to use the greenback and sanctions as an economic weapon.
In January 2023, BRICS – the acronym for Brazil, Russia, India, China, and South Africa – announced that it may explore creating its own currency to bypass the US dollar amid Washington's sanctions spree. Russian economic observers explained at the time that a single BRICS currency could initially play the role of a unit of account for settlements in national currencies and conversion without the use of the dollar. They did not rule out that, in the future, a BRICS currency could become a full-fledged means of payment and get the status of reserve currency. Given that BRICS has been rapidly expanding, the zone of potential dollar-free trade appears to grow.
Trump signaled in March that he is opposed to theweakening of the dollar's dominance across the globe.
"I hate when countries go off the dollar," Trump told CNBC on March 11. "I would not allow countries to go off the dollar because when we lose that standard, that will be like losing a revolutionary war. That will be a hit to our country."
Trump's aides are quietly seeking ways to stop nations from drifting away from the dollar with options including export controls, currency manipulation charges, and tariffs, people familiar with the matter told Bloomberg on the condition of anonymity.
Will more sanctions stop de-dollarization? While only time can tell how the potential initiative by Team Trump could pan out, Saleha Mohsin, a US writer and journalist argues in her new book "Paper Soldiers" that the dollar's weaponization only forces nations to turn their back on the greenback.
The International Monetary Fund revealed in 2021 that the share of US dollar reserves held by central banks plummeted from 73% in 2001 to 59% – its lowest level in 25 years. Mohsin draws attention to the fact that the steady slide coincided with the US governments' expansion of the use of economic sanctions against its rivals.
According to the Quincy Institute for Responsible Statecraft's estimates, Washington's sanctions currently cover 29% of the global economy, with 40% of global oil reserves under such restrictions.
To complicate matters further, the US Congress has authorized President Joe Biden to grab Russia's frozen assets in the US and transfer them for Ukraine's needs. Earlier, some Republican senators, including Rand Paul and J.D. Vance, warned that the move could undermine demand for US Treasuries and upend the role of the dollar in the global financial system.