According to Mark Sobel, former Chief Economist at the US Department of Treasury and current Chair of the Official Monetary and Financial Institutions Forum (OMFIF) USA, Trump's re-election as president may threaten the dominant position of the US dollar globally.

Last week, the Republican National Committee released Trump's campaign agenda, a list of 20 principles that will guide the Republican Party's policy direction. In Article 13, the former president promised to continue the status of the US dollar as the world's primary reserve currency.

However, in a paper written by Sobel, he pointed out that Trump's potential second term may actually weaken the dominance of the US dollar. He emphasized that if the US dollar is threatened, the source will not be external, but is likely to come from the "serious deterioration" of the US economy and financial condition. Sobel believes that under Trump's leadership, fiscal prudence is unlikely to be guaranteed.

Sobel concluded that "although the dominance of the US dollar is still secure, Trump's campaign agenda and policies will reduce people's confidence in US leadership, weaken macroeconomic management, and impose a huge debt burden."

Sobel wrote that in terms of fiscal policy, if the United States wants to maintain a controllable level of debt in the next few decades, it needs to give up huge deficits, but Trump promised to cut taxes on a large scale and will not reduce social security or medical insurance. He also promised to implement a universal tariff of 10%, which most economists believe will lead to inflation.

At the same time, Sobel pointed out that the large-scale immigration restriction plan is expected to slow down the growth of the US economy.

Sobel said, "These factors will put pressure on the stability of the US dollar, although they are not enough to give another currency a chance to replace the US dollar."

Sobel previously pointed out that if geopolitical tensions continue to escalate, US dollar reserves will decrease. This situation is also likely to occur under the leadership of the Trump administration.

In the first term, Trump threatened to withdraw from NATO and withdrew the US from key agreements such as the Iran Nuclear Agreement, the Paris Climate Agreement, and the Trans-Pacific Partnership. Sobel wrote, "Although the agenda claims that the alliance relationship will be strengthened, can the US still be seen as a reliable partner? Can strong links with allies continue?"

Trump uses sanctions more frequently than Biden, a practice that is often seen as a key reason why other countries seek to de-dollarize.

Even under these deteriorating conditions, Sobel does not believe that the dominant position of the US dollar will significantly decline in any form in the next four years.

But he pointed out that Trump's actual policy may weaken his goal of maintaining the US dollar's global dominance, as he wrote, "Actions speak louder than words."

Editor/ping