An economist warned of the risk of the dollar losing its role as a leading currency due to Trump.

The dollar could lose its role as the world's leading currency due to US President Donald Trump's policies, according to American economist Barry Eichengreen. He wrote this in an article for the Financial Times.

Economists generally attribute the dollar's enormous role to the US share of global GDP, as well as the depth and liquidity of US financial markets, the economist notes. Currently, financial market participants believe the US remains the world's leading economy, and the dollar is not in danger, he writes.

Eichengreen then writes, citing the opinion of historians, that in reality the rise and fall of currencies is influenced by the actions of real people, and not by the situation in the economy and markets.

"It was people who took the crucial steps to create the institutions that created the international dollar . And it is people who will ultimately determine whether those institutions survive or fail," he explains.

The dollar's dominance has so far been based on trade, alliances, and institutions, but that era is now at risk of ending, the economist believes.

According to Eichengreen, it took Trump just a few months to "weaken, if not completely destroy" relations with other countries and the principle of reciprocity.The US President and his administration officials are questioning the values ​​on which the dollar's nearly century-long dominance has been based, he believes.

"For the first time in living memory“ The survival of the institutions on which this dominance was based was in question,” the economist writes.

In his opinion, Trump's imposition of tariffs will reduce the US share of global exports, which will only worsen the situation. Furthermore, Trump's actions aimed at undermining the independence of the US Federal Reserve System (FRS) and the perception among allied countries that the US has turned its back on them could impact the dollar's appeal, Eichengreen believes.

Relations between the US and the European Union cooled after Trump's inauguration on January 20. The Republican threatened additional tariffs on American partners, including Mexico and Canada, and also tightened them against China . The entry into force of some of these measures was delayed, but Canada , like China , filed complaints with the World Trade Organization (WTO).

Trump also imposed 25% tariffs on European steel and aluminum; the new tariff policy took effect on March 12. Brussels responded with retaliatory measures. The new tariffs will be implemented in two stages and will be fully effective by April 13.

Trump threatened to increase tariffs on other goods, including wine , on the EU . On March 17, he announced that the US administration still plans to impose mirror tariffs equal to those levied by other countries on imports of US goods. He signed a corresponding executive order in February, but the measures were later postponed until April 2. The Republican considers the EU's policy of collecting taxes on imported goods, including VAT, unfair.

According to European Central Bank (ECB) Vice President Luis de Guindos, the Trump administration's policies are creating more uncertainty in the global economy than the coronavirus pandemic.

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