With their tariff initiative, the USA has thrown down the gauntlet to China and the European Union. The conflict did not come unexpectedly—behind the diplomatic scenes, a currency war has been raging for years, aiming to break the dominance of the US dollar. But make no mistake: neither Brussels nor Beijing have the economic or geopolitical weight to dethrone the greenback, thanks to President Trump’s unrelenting leadership.
Trade conflicts inevitably manifest on the foreign exchange market—the global ledger that records bilateral exchanges and exposes currency manipulations. No country excels in this subtle form of influence more than China. With an export surplus of around one trillion US dollars last year—equivalent to about one percent of global GDP—Beijing holds the unofficial title of world champion in currency dumping. Such a massive imbalance can only be achieved through the consistent devaluation of its own currency, as a free foreign exchange market would act as a hinge for a balanced account.
This "beggar-thy-neighbor" tactic—slashing their currency’s value to undercut rivals—helps China's leadership survive the ongoing deflationary phase and keep the labor market relatively stable. Social stress can erupt suddenly in repressive regimes, a lesson learned from the history of the last century.
In this way, China's leadership exports its social problem to the world by running an artificial economic greenhouse that would collapse like a swollen dough without export subsidies, a low-wage sector, and the manipulated yuan. Trump’s trade policy, which smartly seeks deeper cooperation with production bases like Vietnam and Thailand, is a clear signal: America’s done letting China dominate the global market.
Yuan as the Anchor of a BRICS Currency?
The USA took action during Donald Trump's first term in 2018 with tariffs against segments of China's export machine. Since then, rhetoric between the superpowers has sharpened, and a change of course is unlikely, despite short-term policy shifts.
The announced tariff exemptions for the tech sector are likely aimed at calming the bond market but do not alter the fundamental direction of the USA: combating the twin deficits of trade gap and rising budget shortfall that are draining the domestic economy.
Growing conflict situations in Ukraine, sanctions on Russia, and the dispute with Beijing have breathed new life into the long-dormant BRICS movement. Numerous countries politically support this antagonist to the dominant dollar system to free themselves from the threat of a US dollar weaponized in trade wars. For them, the risk of being excluded from the payment system is very real.
And so, the eyes within BRICS are fixed on the major players, China and Russia. They are expected to establish an independent currency alternative to the dollar zone, one that meets the complex requirements of modern payment systems and a mutually integrated banking system.
Yet Russia, despite being the world’s largest resource hub for gas and oil, lacks the economic stability due to sanctions to support a credible currency alternative. Such a system cannot exist without an anchor—a stable currency that everyone trusts. China’s yuan wants to step up, but it’s falling short.
The BRICS Pipe Dream
The BRICS currency project is less a revolution than a bureaucratic fantasy. The idea of a basket-backed unit or gold-linked settlement currency sounds impressive—until one looks at the fine print. Between Moscow’s kleptocracy and Beijing’s capital controls, there’s no foundation of mutual trust, let alone market credibility.
For all the declarations, the yuan’s share of global SWIFT transactions remains below 5%. In contrast, the US dollar commands 46%, an overwhelming lead. Investors vote with their wallets, not ideology. IMF data confirms the verdict: 58% of global FX reserves remain in dollars, while China’s yuan lingers at a meager 2.3%. That’s not a rising challenger—it’s a paper dragon. Even BRICS allies know it. No one trusts a currency controlled by a one-party state that weaponizes devaluation as an economic crutch.
The Euro Has Failed
Meanwhile, Europeans have never succeeded in establishing their crisis currency, the euro, as a global reserve currency. With the sanctions on Russia, which also encompass the gas trade with Gazprom, the largest single item previously transacted in euros—Russian gas—was eliminated.
Since then, the euro's share of SWIFT transaction volume has fallen from 32% to under 20%, while the dollar cemented its pole position with a share of 69%. This reflects the fundamental structural flaws of the euro system. When it was created 26 years ago, Europe refused joint liability for national debts. The euro was introduced, and national currencies disappeared, leaving a fragmented bond market that’s a playground for speculators, not a foundation for a world currency. Even Brussels’ push for Eurobonds won’t fix this.
The Petrodollar: America’s Powerhouse
In the engine room of the global economy, we find the dollar’s powerhouse: the petrodollar. Economies are driven by energy and resource flows, and the US dollar controls them.
Despite brief headlines about Saudi oil priced in yuan, 80% of the black gold is traded in dollars, and the same holds for most commodities. This is where the dollar’s geopolitical muscle shines: the whole world needs dollars! Whether to buy raw materials or refinance state debts, totaling 17 trillion dollars this year.
Then there’s the offshore dollar market, the Eurodollar—dollars held outside the US—which, with a volume of approximately 13 trillion dollars, hangs as a sword of Damocles over Europe and Asia, forcing everyone to keep dollars on hand.
Gold, Bitcoin and the New Dollar Anchors
The dollar’s future dominance may also benefit from new forms of trust anchors. Proposals to partially back the US dollar with gold or even Bitcoin are gaining traction among conservative economic thinkers, aiming to stabilize purchasing power and restore long-term credibility.
In parts of the developing world where access to US banking is limited, the rise of stablecoins backed by U.S. Treasuries—such as USDT and USDC—is fueling a grassroots expansion of dollar use. These crypto-native instruments are becoming de facto digital dollars for billions, expanding the greenback’s reach far beyond the control of central banks.
King Dollar Still Rules
This trade war isn’t just about tariffs—it’s America’s stand to secure the dollar’s iron grip against China’s currency games and Europe’s structural decay. While Beijing and Moscow chase a mirage with their BRICS experiments, President Trump’s bold leadership has redrawn the global map of power.
Even the ECB’s push toward a digital euro (CBDC) will ultimately reinforce—not weaken—the dollar’s dominance. Neither the yuan, the euro, nor a hypothetical BRICS basket can match the dollar’s trust, liquidity, and reach. In a world of rising debt, fractured alliances, and volatile trade routes, only one currency commands obedience.
“The future doesn’t belong to globalists. The future belongs to patriots.”
— Donald J. Trump, UN General Assembly, September 24, 2019
And under President Trump’s watch, the greenback will remain not just a currency—but a weapon, a shield, and a symbol of American primacy.
_______________
Thomas Kolbe, born in 1978 in Neuss, Germany, is an economist and freelance journalist with over 25 years of experience as an author and media producer. Specializing in economic processes and geopolitical events from a capital markets perspective, his work reflects a libertarian philosophy centered on individual self-determination. He studied in Düsseldorf and Cologne and has served as a speaker for the German Small and Medium-Sized Business Association (BVMW).