Does Trump’s currency war reduce US hegemony?
After the currency war launched by US President Donald Trump, a Russian diamond company announced selling its products to customers such as China and India in rubles, and has already conducted 50 such deals in a clear challenge to the US currency.
Some said the move was a first step in shaking the US dollar, which dominated global financial and trade markets, and a reaction to Trump’s use of his country’s currency in trade wars with the world’s nations to reduce Washington’s huge trade deficit with countries such as China.
The US government has announced sanctions against Russian, Venezuelan, North Korean and Iranian companies, and has prevented their access to dollar trade and financial activities. It also announced a few weeks ago sanctions against Huawei, the Chinese company that is Apple’s strongest competitor.
Some countries, such as China and Russia, have tried to avoid sanctions. They have begun looking for a mechanism to reduce dependence on the US currency. European countries also seek to avoid any US restrictions on their trade dealings with Iran in an attempt to salvage the nuclear deal.
Former US White House official Adam M. Smith said Trump was using US economic power in an unprecedented way, using tariffs, sanctions, trade negotiations and export control, and taking advantage of the importance of the US market for the rest of the world to force them to enter it. According to his conditions.
Smith added that the countries of the world are looking for ways and mechanisms to circumvent the control of the US dollar, and the conditions imposed by Washington, but some people to avoid the US market, and may succeed.
China is the second largest economy in the world after the United States, a major threat to national security and the US economy in the long run. Beijing is seeking to strengthen its strong presence in the world at all levels economically, politically and militarily.
With China gaining strength and dominance, some investors may distance themselves from using the US dollar as a store of value and a currency for international exchanges. Some fear that the dollar will weaken in favor of other currencies, such as the British pound.