Newsweek, April 2025
The U.S. dollar has long enjoyed its status as the world’s premier reserve currency, though recent trade policies have sparked discussions about its future dominance. The dollar’s strength and its related role as the world’s leading reserve currency offer substantial benefits to the U.S. High demand reduces borrowing costs for the U.S. government, ensures that the country can run larger trade deficits without facing a balance of payments crisis, while granting the U.S. significant sway over international financial systems and economic policies.
De-dollarization—countries reducing their reliance on the dollar as both a reserve currency and the primary unit for international financial transactions—could result in increased interest rates and higher borrowing costs for the government, while also taking a toll on America’s international economic leverage. Fears over de-dollarization have been raised in recent days by the administration’s tariff plans, which many warn pose a risk to the currency’s continued strength and historic status.
