US wields power as epicentre of financial world

With the ink still fresh on US President Donald Trump’s latest batch of tariffs, some are already bracing for what may come next in his effort to strong-arm trading partners into doing his bidding.

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As the epicentre of the financial world and the issuer of the global reserve currency, the United States has a number of levers that Trump can pull to coerce other countries from creating a more very provi-sion of dollars to foreign banks.

While deploying these unconventional weapons would come at a large cost for the US itself and may even backfire altogether, observers say such doomsday scenarios should not be discarded.

This would be particularly true if tariffs do not succeed in reducing the US trade deficit with the rest of the world – an outcome many economists see as plausible given the fact that near full employment in the US has led to deep labour shortages, according to Reuters.

The US administration’s not-so-secret plan is to rebalance trade by weakening the dollar. A way to do that would be to enlist foreign central banks in a coordinated effort to revalue their own currencies.