Is Donald Trump putting the US dollar in danger?

The Trump administration increasingly seems convinced that the US dollar’s status as the world’s reserve currency is a burden, not the “exorbitant privilege” that it is often said to be. Key economic advisers such as Stephen Miran believe that the persistent strength of the dollar has driven the deindustrialisation of the American economy by making exports less competitive.

Economists can legitimately debate this. There could even be a smidgen of truth in it, although blaming the rest of the world conveniently ignores poor decisions willingly made by US corporations and politicians. However, treating the dollar’s unique status and strength as yet another example of America being ripped off ignores some obvious benefits.

These include higher margins and lower inflation, but even more important is the impact on markets. The role of the dollar means that Treasuries have been the global reserve asset, which will have made it cheaper for the government to fund itself. Yet there are hints that this is now going into reverse.

The end of American exceptionalism