Donald Trump says his tariffs are about liberation. But his aggressive turn toward protectionism may signal the beginning of a shift away from the foundations that have upheld American prosperity for decades.
The US dollar’s status as the world’s reserve currency has long enabled the United States to consume far more than it produces, to run massive deficits without consequence, and to project unparalleled geopolitical power. Trump’s decision to slap tariffs of up to 25 per cent on imports could put that all at risk.
When French president Valery Giscard d’Estaing referred to the United States’ ‘privilège exorbitant‘ he was not referring to America’s central position in the post-WW2 world order. Giscard was talking about the substantial extra wealth enjoyed by the US courtesy of the US dollar, specifically its central role in the world’s economy, as well as its position as the main ‘reserve currency’ held by foreign banks and Central Banks.
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