Trump’s Policies Crack Dollar Dominance—Euro Seizes Opening
Geopolitical turbulence under Trump’s administration weakens dollar’s grip—eurozone currencies smell blood in the water.
For decades, the dollar reigned supreme as the global reserve currency. Now, trade wars and erratic policies have central banks scrambling for alternatives.
The euro—long playing second fiddle—gets its shot at center stage. ECB officials won’t admit it publicly, but Frankfurt’s printing presses are warming up.
Meanwhile, hedge funds place their bets with all the subtlety of a Wall Street frat party. Some things never change.
Trump’s tariff policies erode confidence in the dollar
The dollar’s attractiveness is being undermined by a wave of unconventional and unsettling financial ideas floated by Trump’s allies. Countries in the bloc are forcing the conversion of Treasury bonds to impose fees on creditors who lend to the US government.
The administration’s hostility towards trade partners has made global investors unsure about how reliable American financial instruments are.
Analysts and economists say the moment could be a “Hamiltonian” turning point for the Eurozone, referring to the US founding father Alexander Hamilton’s unification of state debts under federal management. Europe is issuing a permanent and sizable pool of joint debt that could help replace the current patchwork of national bonds with a single, liquid Eurozone asset.
One proposed action is to stop paying down the debt issued for the bloc’s “Next Generation EU” recovery fund, originally planned to shrink by 2058. Instead, officials could opt to roll it over indefinitely, preserving a permanent euro-denominated SAFE asset.
Another option is consolidating existing EU-backed debt into a single issuance system to streamline borrowing and provide investors with clarity and scale. It could also support proposals like a joint €150 billion defense spending plan.
The EU could also begin borrowing in advance of its next seven-year budget, which is expected to surpass €1 trillion, to maintain a large, stable euro bond market.
Expanding the Eurozone safe asset market
Europe could take advantage of Trump’s tariffs and ask partners to reconsider their dependency on the USD, expanding its trade footprint globally. If trading with the US becomes more troubling, then holding its currency becomes less necessary.
Yet, despite the feasibility of these tools, progress has been stalled by political inertia. Observers argue that what’s missing is not technical capacity, but geopolitical will. European leaders must realize America is making strategic blunders that have made the dollar struggle and raised Treasury yields.
Meanwhile, the euro held above $1.13 last week as inflation data for the Eurozone outperformed expectations. Annual inflation remained steady at 2.2% in April, slightly above forecasts, while services inflation ROSE to 3.9% and core inflation climbed to 2.7%.
President Trump to tax foreign-made films
Elsewhere, President Trump has declared a new 100% tariff on films made in foreign countries. According to the BBC, Trump said the films will be used to spread propaganda against America, and accused foreign governments of luring US-based studios abroad through tax breaks and subsidies.
“It is, in addition to everything else, messaging and propaganda!” Trump wrote on Truth Social. “WE WANT MOVIES MADE IN AMERICA, AGAIN!”
Commerce Secretary Howard Lutnick confirmed the administration would implement the new levy soon. Still, it is unclear if the tariffs would apply to American production companies that shoot overseas or how they would affect films on streaming platforms such as Netflix.
Several blockbusters, including Deadpool & Wolverine, Wicked, and Gladiator II, were all shot outside the US.
Australia’s Home Affairs Minister, Tony Burke, told reporters Monday that the government “will be standing up unequivocally for the rights of the Australian screen industry.”
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