The United States is a world superpower, but for the first time in a long time, we can start to consider signs of slippage. The US is not just a military might; it has one of the world’s largest consumer markets, with imports that reach over $3 trillion annually.
Countries hit by tariffs announced on April 2, 2025, are now scrambling to find alternatives or reduce their dependence on the US consumer markets.
For example, China, which exported up to $560 billion to the US in 2024, the EU, which exported $576 billion, and Canada with its $421 billion in exports, heavily depend on access to this market, filled as it is with hardcore consumers.
One way some could find relief is through crypto and stablecoins as strategic tools to mitigate some risks from Trump’s tariffs. Issuing stablecoins pegged to their local currencies or assets can help them reduce dependency on the US dollar, streamline trade, and protect their economies from tariff-driven disruptions.
The irony is not lost on the average observer. Before Trump became president again, crypto was frowned upon and not encouraged in many of these countries. Their respective governments did all they could to bury the sector with stifling regulations, tax rates, and heavy-handed reactions to slip-ups.
Trump’s tariffs could mean it’s locally issued stablecoin time
Some countries that have supported the release of stablecoins tied to their local currency right now include Dubai, whose AE Coin, was granted in-principle approval in October 2024 and full regulatory approval by December, making it the UAE’s first regulated stablecoin pegged 1:1 to the UAE dirham.
South Korean exchanges already offer a hint into how crypto markets can operate locally, with most of its exchanges predominantly offering KRW pairs.
There are also plans by the Bank of Korea to launch the ‘Hangang’ CBDC pilot program, which will reportedly last from April to June 2025 and involve 100,000 participants. If it ends up a success, the CBDC could give South Korea a Korea won-pegged digital currency, even if it is the less popular option compared to on-chain stablecoins.
The pilot will include seven major banks: KB Kookmin, Shinhan, Woori, Hana, Industrial Bank of Korea, Nonghyup, and Busan. Participants can convert their bank deposits into tokenized deposits for local payments, with a maximum limit of 5 million won (approximately $3,445).
With developments like these in various countries, it is clear that the stablecoin segment, which has already seen significant capitalization, will see even more. However, stablecoins other than the dollar still have limited trading volumes.
USDT routinely sees more than $60 billion in daily trading volume, while USDC is close to $10 billion. On the other hand, euro stablecoins (e.g., EURT, agEUR) rarely exceed $5–10 million in daily trading volume.
It is crucial to note that the proliferation of national stablecoins could lead to a fragmentation of the global stablecoin market. This means that rather than a few players like Circle and Tether dominating the scene because of their dollar products, the world could witness the birth of a patchwork of local stablecoins, all of which would be tailored to their home country.
In that scenario, citizens from countries outside the US may be able to trade crypto pairs against their locally-backed stablecoins, instead of the USD pairs that are the current standard.
That level of fragmentation will have a negative impact on the dollar and the universal appeal and dominance of dollar-backed stablecoins, as they’d struggle in the face of competition from region-specific alternatives.
Let’s not forget that dollar-backed stablecoins are a big deal right now because of the US dollar’s status as the world’s reserve currency. If countries start encouraging the use of local fiat or stablecoins for international trade or cross-border payments, it could reduce global reliance on the dollar.
If this goes on long enough, it might erode the dollar’s dominance, indirectly affecting the popularity and stability of dollar-pegged stablecoins.
While it is unlikely countries will outrightly issue stablecoins, they could certainly set up to make it straightforward for issuers to create local stablecoins in their respective countries.
Stablecoins in yen and yuan at this time are almost non-existent on major exchanges and DeFi protocols. The same goes for stablecoins in emerging market currencies like rubles, reais, rupees, etc. They are all virtually absent from the crypto market, and this limits their potential for building robust currency strategies, including FX and carry trades, which are at the core of the global financial market, which has a daily volume exceeding $7 trillion.
Response to the tariffs may affect Americans more than expected
Since the tariffs became a thing, various business entities and countries have threatened retaliation, while others have gone ahead with it.
Automaker Stellantis has promised to temporarily lay off U.S. workers and close its plants in Canada and Mexico, while General Motors said it would increase U.S. production.
Canadian Prime Minister Mark Carney says the United States has now abandoned its historic role as a champion of international economic cooperation.
“The global economy is fundamentally different today than it was yesterday,” he said while announcing several countermeasures.
Meanwhile, China has vowed to retaliate against Trump’s 54% tariffs on imports from it, as did the European Union, which faces a 20% duty.
French President Emmanuel Macron has called for European countries to suspend investment in the United States while the country’s other trading partners, including Japan, South Korea, Mexico and India, are threading cautiously despite impending damages, saying they plan to hold off on any retaliation for now as they seek concessions.
Despite Macron’s call to boycott US investments, Britain’s foreign minister has said it was working to strike an economic deal with the United States.
In the meantime, allies and rivals alike have warned the tariffs will deal a devastating blow to global trade.
The tariffs “clearly represent a significant risk to the global outlook at a time of sluggish growth,” said IMF Managing Director Kristalina Georgieva, who has called on Washington to resolve trade tensions with its partners and reduce uncertainty.
US Commerce Secretary Howard Lutnick and senior trade adviser Peter Navarro both said on Thursday that the president is resolute and that the tariff increases were not a negotiation, a statement Trump appeared to contradict when he told reporters:
“The tariffs give us great power to negotiate. Always have. I used it very well in the first administration, as you saw, but now we’re taking it to a whole new level.”
