The relationship between loudmouthing Tariffs and Dedollarisation
Peter McGahan
Monday 21st April, 2025.
PART Four in our series: The Global Shift Away from the US Dollar
Hopefully you may remember my comments on dedollarisation in June 2023 – ‘it will happen’. This journey of explanation of dedollarisation turns to the calamity and farcical charade that is - tariffs.
I’m writing this from deep in the hills in India, studying everything about them – I can only describe it as an economic powerhouse, doing what the USA didn’t.
We’ve watched the global financial system run on the US dollar for decades, and now we’re seeing a quiet but decisive detour forming around it. Oddly enough, it’s not wars or debt ceilings driving this change, it’s tariffs.
Tariffs are the currency equivalent of shouting at your neighbours while they quietly build a more efficient house elsewhere.
Tariffs today aren’t about reviving manufacturing or correcting imbalances. They’re economic punishments, designed to protect the dollar more than the factory.
The US no longer makes most of what it consumes and those with money prefer stock buybacks over new machines. Today’s tariffs, particularly under Trump’s brand of economic nationalism, are defensive walls thrown up against countries daring to move away from the dollar system.
The real goal is to preserve the dollar’s network.
The US benefits massively from global dollar demand. It allows Washington to run deficits, fund military adventures, and control global capital flows without sweating too much about the maths behind that. That system only works if everyone needs the dollar.
When China starts settling oil in yuan, or BRICS banks issue local currency loans, or mBridge lets countries transact digitally in their own digital currencies, it threatens the entire old scaffolding. Tariffs, then, are part of the backlash. They're not about job creation. They’re about compliance.
They don’t work.
Global supply chains are too intertwined, so slapping tariffs on semiconductors or solar panels doesn’t 'bring back jobs'. It just hurts US firms who rely on those components. It’s like banning bricks during a building boom.
China and others hit back with restrictions on critical minerals or agriculture – and world class sarcasm on TikTok. But more subtly, they diversify reserves, settle in local currencies, and expand non-dollar payment systems like mBridge.
We’re not in 1995 anymore. The dollar isn’t the only game in town. Countries are building new financial plumbing - digital yuan corridors, BRICS Pay, gold-backed instruments. Every tariff imposed just pushes them further along this path.
Donald Trump likes to dress tariffs up in the garb of America’s industrial past citing the 19th-century “American System.” Those tariffs were for nation-building, not empire maintenance. Today’s tariffs defend monopolies, not manufacturing.
They shield the profits of all rentier elites, not workers. And they punish any nation that dares to chart an independent path. This isn’t protectionism. It’s economic coercion with a Stars and Stripes sticker slapped on top.
What we’re seeing now is remarkable: a coordinated, bottom-up revolt against dollar coercion.
China is scaling the e-CNY (digital currency) and cutting dollar usage across the Belt and Road.
Russia trades in roubles and gold, shrugging off SWIFT bans.
Saudi Arabia and the UAE are selling oil for yuan.
Africa and Latin America are turning to local currency swaps and BRICS financing.
They’re not protesting in the streets. They’re just bored and moving on.
Every new tariff fuels a feedback loop:
Less trust in the dollar. More local currency trade. More alternative infrastructure. Less dollar demand.
It's not rebellion with fire and pitchforks. It's quiet pragmatism: building new bridges when the old roads below start charging tolls.
The dollar once represented neutrality and dependability. Now, it comes with fine print, surveillance, and sudden penalties. As countries witness reserves frozen, trade punished, and contracts rewritten at a political whim, they ask the correct simple question: Why stay exposed?
The more the US uses tariffs to defend its monetary privilege, the more it undermines that very privilege.
Tariffs were meant to bring the world back in line. Instead, they’ve hastened its departure. They’ve revealed the dollar for what it has become - not a neutral facilitator of trade, but a gatekeeper with a grudge.
The global shift we’re witnessing isn’t ideological. It’s infrastructural. Countries aren’t fighting the dollar. They’re bypassing it. One payment corridor, one CBDC, one trade deal at a time.
And every tariff? It’s just another sign pointing to the exit. Here in India, they just shake their heads at Trump, bursting his ball with a knife.
If you have any questions you would like me to answer on dedollarisation, please call 01872 222422 or email info@wwfp.net
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
