Trump’s Real Fight: Stopping China’s De-Dollarization Push

The fight over “de‑dollarization” is not about a dramatic currency replacement tomorrow; it’s about whether incremental shifts away from the dollar erode U.S. leverage over years—and President Trump has made defending the dollar’s primacy a declared policy priority, pairing rhetoric with threats of 100% tariffs on countries that back alternatives.

At a Glance

Trump has tied defense of the U.S. dollar to trade policy, warning BRICS governments against supporting dollar alternatives and threatening punitive tariffs.
His second-term agenda casts the “mighty US dollar” as a strategic asset to be actively protected, not merely assumed.
China’s role—via yuan internationalization and BRICS initiatives—anchors Washington’s concern, even as the dollar remains dominant across reserves and trade invoicing.
The near-term landscape favors the dollar, but gradual diversification—if unchallenged—could chip away at U.S. sanction power and financing advantages.

Trump’s stated objective: defend dollar primacy with trade leverage

President Trump has repeatedly framed preservation of the dollar’s global role as a core priority, coupling it to trade instruments that Washington can deploy immediately. In late 2024, he warned that countries backing a BRICS alternative to the dollar would face tariffs of up to 100%, casting the bloc’s de-dollarization drive as “FINISHED” if met with U.S. resolve. Around the same period, Trump and his advisers emphasized that any Chinese move to weaken its currency—or to facilitate broader dollar workarounds—would draw a hostile response; a senior trade adviser underscored that a Trump Treasury would not “appreciate” yuan devaluation efforts, a signal that currency policy and trade enforcement would be tightly linked. Trump’s public remarks make the intention plain: he does not intend to allow countries to “go off the dollar” if U.S. tools can stop it.

This approach is consistent with his longstanding posture toward currency policy. During his first term, Trump accused China and the European Union of manipulating their currencies to gain an unfair advantage, arguing that the playing field was not level. He also castigated Beijing when the yuan weakened sharply in 2019, characterizing it as manipulation that would ultimately backfire on China. The continuity matters. It shows a through-line from earlier complaints about exchange-rate tactics to today’s broader campaign to deter de-dollarization efforts, particularly those perceived as China-led.

Why dollar dominance is treated as strategic, not merely financial

Dollar primacy confers more than prestige; it gives Washington room to run deficits at lower cost, to transmit monetary policy globally, and to wield sanctions with unusual reach. Policymakers therefore respond not just to the risk of a sudden dethronement—which is remote—but to the compounding effect of small diversifications that, over a decade, could reduce the potency of U.S. tools. Academic and policy analyses broadly find that while BRICS members have implemented steps to use local currencies more often, those gains remain modest against the dollar’s entrenched advantages in reserves, foreign-exchange turnover, and trade invoicing. A June 2024 analysis from the Atlantic Council’s GeoEconomics Center reached a similar conclusion: BRICS initiatives had yet to dent the dollar’s global preeminence in a material way.

That resilience owes to market structure as much as geopolitics: deep, liquid U.S. capital markets; credible institutions; and the network effects of decades of invoicing and hedging in dollars. Even where governments prefer to diminish dollar reliance, businesses and banks prize liquidity, legal clarity, and a robust lender-of-last-resort backstop—features still concentrated in the dollar system. This is the backdrop against which Trump’s threats land: he aims to raise the cost of experimentation by tying it to trade penalties, betting that commercial interests and finance ministries will balk.

China, BRICS, and the mechanics of de‑dollarization

Beijing’s program has been incremental and pragmatic: expand offshore yuan liquidity, build settlement rails, sign bilateral swap lines, and route some commodity trade in yuan. BRICS forums add institutional architecture—the New Development Bank, the Contingent Reserve Arrangement, and recurring discussions of non-dollar settlement—that, over time, can normalize alternatives alongside the dollar. Scholars generally describe this as partial and episodic progress, not a straight line to replacement; network incumbency and convertibility constraints limit how far and fast the yuan can move without substantial financial opening. Yet the political signal is persistent: a preference for plurality over dollar singularity.

Trump’s response treats that plurality as a strategic challenge. When he warns of 100% tariffs for countries that “try to replace the dollar,” he is not adjudicating optimal invoice currency so much as drawing a bright line for U.S. partners and counterparties: embrace alternatives and face trade pain. That framing resonates with earlier currency-manipulation arguments—especially toward China—because it fuses exchange-rate conduct with a broader effort to dilute dollar centrality.

What the evidence shows—and what it doesn’t

Three claims are well supported. First, Trump explicitly elevated defense of the dollar as a second-term priority, publicly lauding the “mighty US dollar” and warning BRICS governments off dollar-end runs. Second, he and his advisers have telegraphed an intent to punish perceived currency manipulation or policy choices that facilitate de-dollarization, especially by China. Third, the near-term risk to dollar dominance remains limited by structural advantages documented across academic and policy research, even as incremental de-dollarization advances at the margins.

What is less defined is the bureaucratic machinery—executive orders, Treasury designations, coordinated sanctions-tool updates—that would operationalize an anti-de-dollarization campaign beyond tariffs. Public reporting to date has focused on Trump’s statements and advisories rather than on formal directives. That does not change the thrust of policy signaling—markets and ministries respond to credible threats—but it does shape how enduring and systematic the effort becomes if not anchored in standing guidance or multilateral coordination.

Policy mechanics: tools available to a dollar‑defense strategy

Beyond tariffs, Washington’s toolkit is extensive. Treasury can tighten sanctions compliance and extend secondary sanctions risk to banks facilitating sanctioned trade through non-dollar channels. Financial regulators can sharpen due diligence expectations for correspondent banking relationships that intersect with opaque payment systems. The U.S. can also expand dollar swap-line access selectively to friendly central banks—rewarding dollar loyalty—while using development finance and export-credit support to anchor commodity and infrastructure contracts in dollars. None of these measures require the world to love the dollar; they simply align incentives so that the cheapest, safest path for most transactions remains dollar-denominated.

For China, the friction point is convertibility and trust. Widening yuan use without full capital-account openness and an independent policy framework creates inevitable ceilings; widening it with openness exposes domestic priorities to global cycles. That is why much of Beijing’s progress has clustered in specific bilateral corridors and state-to-state deals. Trump’s strategy seeks to raise the external cost of those corridors through trade linkages, hoping to keep them bounded while the dollar’s network effects continue compounding.

💸Foreign countries are building CBDCs to trade without using the U.S. dollar to avoid American sanctions. 134 countries representing 98% of global GDP are actively exploring or developing a CBDC.

All 11 members of the BRICS economic bloc are actively piloting CBDCs.

The U.S.…

— Jessica McGuire (@jezzaica) September 1, 2026

The likely path ahead: gradualism meets deterrence

The practical forecast is unglamorous but decisive. Expect continued, measured experimentation by BRICS members in local-currency settlement, punctuated by high-profile announcements that move fewer real dollars than the headlines imply. Expect Washington—under Trump—to contest those moves where trade leverage is strongest, target egregious currency actions as manipulation, and communicate that alternative rails carry regulatory and commercial costs. In that equilibrium, the dollar remains dominant; the margin of erosion is the battleground. If the administration couples its rhetorical line with consistent, rules-backed implementation, it can slow diversification further. If not, the drip of alternatives continues, and over a decade the cumulative effect—not a single event—matters most.