Donald Trump has officially launched his tariff deployment spree. In a recent announcement, Trump shared how he is all set to levy 25% tariffs on Canada and Mexico, which are scheduled to go live from March 4th, 2025. That being said, the tariffs have gone live at the time of writing, sparking widespread fears of a brewing trade war narrative. This trade war may become expansive, with nations contemplating deploying counter tariffs on the US to nullify the effect. Also, with the de-dollarization agendas peaking at the same time, what if the world ends up alienating the US dollars, supporting alternate currencies to sustain their interests and needs?
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3 Currencies Competing With The US Dollar
1. Euro
The euro is the second most celebrated currency after the US dollar. Trump is also planning to levy 20% tariffs on the EU, which can be incredibly troublesome for the US economy, hindering its growth. At the same time, the data from Statista reiterates the current sentiment, asserting the Euro is the second largest currency to be used in international payments in the last 5 years.
If the global trade war narrative catches pace, the nations may collectively decide to ditch the USD, opting for the Euro as their next best substitute in line to explore and transact with.
2. Chinese Renminbi/Yuan
Chinese Yuan or Renminbi might be another noteworthy substitute that can take USD’s place. For instance, the US has levied 20% tariffs on Chinese imports, thwarting China’s vision of growth. If China decides to retaliate, it may add more pressure on the USD.
In addition to this, China’s growing economic influence is worth noting. The nation has done the majority of its trade with Russia in yuan, streamlining its usage as of late. At the same time, Yuan’s usage in global transactions is consistently rising. This development makes it a lucrative alternative to the US dollar if the trade war takes a u-turn.
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3. British Pound (GBP)
The British pound is another noteworthy currency that can peak if de-dollarization and trade war consequences end up pushing the dollar to new lows. GBP is referred to as the leading reserve currency. In addition to this, people also call London the next-level financial hub of the world, making GBP a strong contender for this race.
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