Death of the dollar is suicide

PART Four in our series: the global shift away from the US dollar.

- Peter McGahan

I hope you may remember my comments on dedollarisation in June 2023: “It will happen”. On my journey to explain dedollarisation, I now turn to the calamity and farcical charade that is tariffs.

I'm writing this from deep in the hills of India, where I’m studying everything I can about the country. I can only describe it as an economic powerhouse, doing what the USA didn’t.

We've watched the global financial system run on the US dollar for decades, and now we're seeing a quiet but decisive detour.

Oddly enough, it’s not wars or debt ceilings driving this change; it’s tariffs.

Tariffs are the currency equivalent of shouting at your neighbours while they quietly build a more efficient house elsewhere. Tariffs today aren't about reviving manufacturing or correcting imbalances; they're economic punishments, designed to protect the dollar more than the factory.

The US no longer makes most of what it consumes and those with money prefer stock buybacks over new machines. Today's tariffs, particularly under President Donald Trump’s brand of economic nationalism, are defensive walls thrown up against countries daring to move away from the dollar system. The real goal is to preserve the dollar's network.

The US benefits massively from global dollar demand. It allows Washington to run deficits, fund military adventures and control global capital flows without sweating too much about the maths behind that. That system only works if everyone needs the dollar.