NEW YORK – The U.S. dollar is having its worst year in a decade, and with U.S. deficits projected to soar nearly 70% this year, there’s little support on the horizon for the beleaguered currency. Official declarations from the White House that promised a “strong dollar” have failed to break free of the rate decline in place since April 2025, when the crashing Liberation Day tariffs went into effect. The dollar has lost almost 10% of its value in the past year, and investors aren’t yet piling back in.
The headwinds for the “greenback” aren’t merely mathematical; they’re psychological. For decades, the world over, it was the ultimate “haven” currency, where everyone parked their money when things got rocky. Now that so much of the economic confusion in the world is emanating from trade policies made by the administration in the United States, traders are beginning to seek safety elsewhere. Could the age of “Dollar Dominance” be coming to an end?
Kevin Warsh and the Fed
The markets right now are all about Kevin Warsh, President Trump’s pick to take over from Jerome Powell as the head of the Federal Reserve. And while Warsh is labelled an “inflation hawk” (that would be someone who generally likes higher interest rates), his nomination sent mixed signals.
Even President Trump recently acknowledged he selected Warsh only because the man promised not to raise interest rates. This has raised fears that the Federal Reserve, which is supposed to be independent, is becoming too political. Investors have been concerned that if the Fed is forced to keep rates low only in order to satisfy the White House, it would result in higher inflation and a much weaker dollar over time.
Gold Zooms as the ‘New Safe Haven’
With the dollar on shaky ground, investors are piling into “hard assets.” Gold has seen the biggest gains, surging more than 70% in the past year. Despite a recent decline, it is near historic highs as countries and individuals search for an alternative to U.S. currency.
Also, the other “safe” currencies are winning:
• The Swiss Franc: Touted as the most stable currency in the world, and experiencing a spike in demand.
• The Euro and Pound: They’ve both strengthened against the dollar, as European trade ties continue to be a major point of contention.
• Hard Metals: Silver, platinum and even industrial copper are rising as investors “quiet quit” the U.S. dollar.
A Decades-Long Shift?
There is some suspicion among economists that, this time, there’s more going on than just a routine “dip” in the market. “By making tariffs and threatening sanctions a weapon, the U.S. has opened up Pandora’s box for itself,” they say, adding that the “America First” policy and using tariffs as a club are compelling other countries to conduct business without their currency.
Although there is no single currency currently ready to replace the dollar as the de facto world currency, the “diversification trade” is alive and well. If the U.S. persists in diverging from the global rules-based order, experts say there is a risk that the “exorbitant privilege” of having the dollar serve as the world’s reserve currency could be lost, a change that would take 10 years to unfold but alter irrevocably how money flows around and through our planet.
Key Highlights
- • Despite recent rallying efforts, the U.S. dollar is still 10% below its level a year ago.
- • Gold prices are up 70 per cent as investors seek alternatives to the U.S. dollar.
- • President Trump’s selection of Kevin Warsh for the Fed increases concerns over the political independence of the bank.
- • “Policy uncertainty” from the White House is sending capital to the euro and Swiss franc, analysts say.
Follow Inspirepreneur Magazine for the latest American breaking news.
