Donald Trump’s next financial war might not be with BRICS nations or even the Federal Reserve. It’s likely going to be with himself.
The former president, back in power and already stirring up global drama, may soon face an impossible decision: save the U.S. dollar or bet big on Bitcoin. For a man who thrives on chaos, the stakes couldn’t be higher.
On one side, Trump is aggressively defending the dollar’s dominance, threatening a 100% tariff on BRICS countries if they move forward with plans to ditch the greenback. On the other, his rumored Bitcoin reserve plan could make the U.S. the first major government to officially back crypto.
These two positions cannot coexist. The outcome will define global trade, crypto markets, and America’s financial future.
Trump’s BRICS problem
The BRICS nations got tired of playing by America’s financial rules and have been meeting to figure out how to break free from the dollar. At a recent summit hosted by Trump’s buddy Russian president Vladimir Putin, they openly discussed creating their own currency or strengthening trade using local currencies.
The goal was simply to reduce reliance on the dollar and, by extension, U.S. economic power. Trump isn’t taking it lightly. He fired off a warning on Truth Social, demanding that BRICS nations back down.
“Any country trying to undermine the dollar will wave goodbye to access to the U.S. market,” he wrote. His response? Tariffs. Not just any tariffs, but a 100% tariff on all BRICS exports. Yeesh!
Imagine the fallout. A tariff this extreme would send U.S. consumer prices through the roof. From smartphones to oil to basic food items, costs would skyrocket. American companies relying on imports from BRICS nations would face devastating disruptions.
But Trump sees this as a necessary decision to protect the dollar. Still, the plan could backfire. His heavy-handed tactics will provoke the BRICS into speeding up their anti-dollar efforts.
If they succeed, the global financial system could move away from America’s control faster than anyone expects. Even allies like Japan and the European Union might start exploring alternatives.
The Bitcoin factor
Trump’s plans involve the U.S. buying 200,000 bitcoins a year for five years, eventually creating a national reserve of one million bitcoins. But to be very honest, Bitcoin isn’t exactly a safe bet. Sure, it’s trading at $100,000 now, but its history is one of wild volatility. Prices can swing dramatically overnight.
Using Bitcoin as a national reserve asset is like building a house on quicksand. The risks are massive, especially for the world’s most powerful economy.
Then there’s the funding. Trump’s plan involves selling off U.S. gold reserves to buy Bitcoin. This is controversial for obvious reasons. Gold has been the go-to asset for stability during economic crises for centuries.
Trading it for Bitcoin, which has only been around for 15 years, is a gamble that could backfire spectacularly. If Trump does make America go all-in on Bitcoin, he will have to inadvertently hurt the dollar, like the legendary Arthur Hayes predicted.
A government-backed Bitcoin reserve would send a strong signal to global markets that crypto is the future. And while that would be quite amazing for us, it’d actually weaken confidence in the dollar as the world’s primary reserve currency.
Investors might start dumping U.S. assets for crypto, triggering a financial revolution that even Trump might not be able to control.
Is the dollar set for collapse?
Financial experts are also sounding the alarm on Trump’s plans. UBS Wealth Management has advised investors to bet against the dollar’s continued strength. “We caution against chasing USD strength; instead, we suggest selling dollar upside potential for yield pickup,” they wrote in a recent note. UBS recommends shorting the euro below $1.05, the British pound below $1.25, and the Australian dollar below $0.63.
Meanwhile, currencies like the Swiss franc are gaining attention as safer bets. UBS favors buying the franc above 0.90 against the dollar. Defensive currencies like the franc could become the go-to for investors looking to hedge against dollar weakness.
Not all currencies will benefit equally. UBS warns that currencies heavily tied to U.S. exports, such as the Canadian dollar and Mexican peso, could suffer if Trump’s tariffs disrupt trade. The same goes for China.
Now to answer the big question:- Trump is likely to stick with the dollar. Despite his commendable Bitcoin ambitions, the risks of undermining U.S. financial power are too big, even for him. He’ll fight BRICS with tariffs, protect the dollar’s dominance, and maybe toss Bitcoin a bone to keep the crypto crowd happy.
But when push comes to shove, the dollar isn’t just America’s currency, it’s its strong weapon. The president knows that, and he’ll play it safe when the stakes are this high.
