How Trump Is Debasing the Dollar and Eroding U.S. Economic Dominance

It’s been a couple of weeks since Donald Trump and his cohort tried to bully the U.S.’s European allies into submission over Greenland, but the reverberations are still being felt. “There was a real sense that we were witnessing a moment of rupture,” Eswar Prasad, an economist at Cornell University and the Brookings Institution, who was attending the annual World Economic Forum, in Davos, Switzerland, when Trump flew in, recounted to me. “One thing that was clear to Europeans was that they can no longer trust the U.S. as a reliable ally on military security, economic security, or any other major matter.” The geostrategic implications of this realization are still coming into focus, as many governments around the world ponder the warning from Mark Carney, the Prime Minister of Canada, that “middle powers” need to come together in self-defense. In the financial markets, where things move faster, there has already been a dramatic reaction—one that has raised new questions about U.S. economic leadership and the dollar’s long-standing status as the dominant global currency.

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