Economics and Finance

Tariffs, Digital Dollars, and Stablecoins: Contradictions in Trump’s Economic Policy and the U.S. Dollar’s Reserve Status

Authors: Hyunho Shin
Comments: 28 Pages.

This paper critically examines the structural contradictions within Donald Trump’s economic policy platform and their implications for the U.S. dollar’s role as the global reserve currency. Centering on three interlinked policy domains—aggressive tariff implementation, opposition to a central bank digital currency (CBDC), and endorsement of privately issued USD-backed stablecoins—this analysis explores how such strategies, though framed as pro-sovereignty and pro-growth, may paradoxically destabilize the very foundations of American monetary power.Using theoretical frameworks such as the Triffin dilemma and institutional trust models, the study reveals how tariff-driven protectionism can fuel inflation, strain U.S. trade partnerships, and erode confidence in Treasury bonds. The prohibition of a CBDC, meanwhile, isolates the U.S. in the global shift toward digital currencies, undermining long-term innovation and ceding leadership to geopolitical rivals such as China and the EU. Simultaneously, Trump’s support for privately issued digital dollars—some of which are directly tied to his own financial interests—raises serious concerns about the privatization of monetary functions and the erosion of public trust in the neutrality of U.S. currency issuance.A risk model outlines scenarios ranging from gradual erosion of trust to acute financial crises involving capital flight from U.S. debt instruments. The paper compares the U.S. dollar's credibility mechanisms with those of Bitcoin and stablecoins, highlighting the limitations of private digital currencies as substitutes for sovereign money.Ultimately, the study concludes that Trump’s policy triad—tariffs, anti-CBDC populism, and personal coin issuance—threatens the credibility, neutrality, and global utility of the dollar. Recommendations are offered to realign U.S. strategy toward a more balanced, transparent, and innovation-driven monetary leadership. The future of the dollar hinges not merely on economic fundamentals, but on consistent policy stewardship, institutional trust, and global cooperation.
Category: Economics and Finance