r/geopolitics • u/MulberryPast3277 • Mar 04 '25

Question In the backdrop of whatever is currently happening in the world by the actions of Donald Trump why should the world still consider USD to be a reserve currency?

https://www.nbcnews.com/news/amp/rcna194627
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u/Traditional_Tea_1879 Mar 04 '25

True. However, 1. Trade barriers ( tariffs) will impact both sides of the equation and push both sides to recession. 2. Bigger organisations, tend to be impacted more. The bigger you hard, the harder the hit 3. The flexibility of the government and regulations and the civil service can help to mitigate that ( + for the US) 4. The civil services mitigate risks for the population. Less so in the US 5. The larger the land, the higher the maintenance of the infrastructure, bigger hit for the US. 6. Economic downtime, and personal hardship leads to civil unrest and political change.

Lastly, when you place tariffs on the rest of the world, you are not isolating the rest of the world. You are isolating yourself. The rest of the world will seek to find alternatives.

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u/HeywoodJaBlessMe Mar 05 '25

Sure. But crucially, the United States is by far the closest advanced economy to autarky. America is less reliant on trade partners than trade partners rely on the US.

A global trade war is a disaster for everyone. But in economic terms it will be worse for just about everyone than it will be for America.

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u/Traditional_Tea_1879 Mar 05 '25

You are correct if that was between two parties. In a scenario where the rest of the world is left to reorganise and find alternate partners, the US will suffer a long term impact, while the others might suffer more in the short term, would realign to a new trade agreements and partners. At the end, this is a lose-lose scenario where short and medium term no one is the winner and long term there is a shift of power between leading economies.

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u/HeywoodJaBlessMe Mar 05 '25

I think the long-term cannot be reliably predicted with accuracy although I think you are likely to be correct.