1. Introduction: Tariff War and Hegemonic Competition
The tariff policies of the Trump administration go beyond simple protectionism and are directly linked to America’s global hegemony strategy. Unlike previous administrations that largely pursued free trade agreements—such as NAFTA under Clinton and the Trans-Pacific Partnership (TPP) under Obama—Trump took a more confrontational approach, using tariffs as a central economic weapon. This marked a shift from diplomatic trade negotiations to direct economic pressure, even on allies.
By implementing industry-specific protection measures, such as tariffs on steel and aluminum to support the domestic manufacturing sector, while also imposing restrictions on Chinese electronic products and semiconductors, the U.S. prioritized its domestic economy. This policy intersects with multiple factors, including the dollar’s role as a global reserve currency, the competition between alternative assets (gold vs. Bitcoin), and economic pressure on traditional allies. Furthermore, recent movements by some countries to bypass the dollar settlement system suggest a potential shift in the global economic order.
2. Trump’s Tariff Policies and Hegemonic Strategy
(1) Tariffs as an Economic Strategy, Not Just a Negotiation Tool
- Tariffs, previously a trade negotiation tool, have become a direct economic instrument under the Trump administration.
- High tariffs were introduced to compensate for tax revenue deficits resulting from Trump’s tax cuts:
- A 25% tariff on Canadian and Mexican imports was projected to generate $2.3 trillion in revenue over 10 years.
- This policy helped solidify support among MAGA (Make America Great Again) voters.
- While tariffs were officially justified by concerns over fentanyl trafficking and illegal immigration, the real objective was economic dominance and maintaining global hegemony.
(2) Applying Trade Pressure on Allies
- Traditionally, the U.S. maintained its global power through cooperation with allies, but Trump extended economic pressure even to friendly nations.
- High tariffs on Canada, Mexico, and Colombia served as part of an “economic discipline” strategy.
- Trump’s policies signal a shift from global hegemony to regional hegemony, focusing on the Americas.
3. The Dollar’s Hegemony and the Trade War’s Historical Context
(1) The Evolution of Reserve Currencies: From Gold and Silver to the Dollar
- Ancient and Medieval Periods: Gold, silver, and even salt (used in the Roman Empire) functioned as global currencies.
- European Colonial Era: The currencies of dominant empires served as international reserve currencies, but gold and silver remained crucial.
- Post-World War I: The U.S. established the gold standard, linking the dollar to gold, ensuring its stability and trustworthiness. This system was first introduced by Britain in the 19th century, making the British pound the most reliable global trade currency. The U.S. later adopted a similar system, stabilizing the international financial market and laying the foundation for the dollar’s reserve status after World War II.
- Post-World War II: The 1944 Bretton Woods Agreement established the gold-backed dollar system with a fixed exchange rate of $35 per ounce of gold. France and Germany adhered to the gold exchange standard within this system but grew increasingly skeptical as the U.S. printed more dollars in the 1960s. France aggressively exchanged dollars for gold in 1965, while Germany increased its gold reserves as a hedge. However, the Nixon Shock of 1971 ended the gold standard, forcing these countries to adopt floating exchange rates.
(2) The Collapse of the Bretton Woods System and the Dollar’s Continued Dominance
- The Nixon Shock (1971): The U.S. ended the gold convertibility of the dollar due to unsustainable financial burdens from the Vietnam War and rising welfare costs.
- As global trust in the dollar declined, central banks increased their gold reserves, rapidly depleting U.S. gold reserves.
- On August 15, 1971, President Richard Nixon officially ended the dollar’s gold convertibility, leading to the collapse of the Bretton Woods system.
- Despite the collapse, the dollar remained the world’s dominant reserve currency due to:
- The overwhelming economic and trade influence of the U.S.
- The perception of the dollar as a stable asset.
- The introduction of the “Petrodollar” system: The U.S. struck a deal with oil-producing nations, particularly Saudi Arabia, to ensure that all oil transactions were settled in dollars. This reinforced global demand for the currency and ensured continued U.S. financial dominance.
4. The Battle Between Gold and Bitcoin as Alternative Assets
(1) China’s Strategy: Weakening Dollar Hegemony Through Gold Reserves
- China has aggressively increased its gold reserves, moving away from U.S. Treasury bonds.
- 2022: 1,948 tons → 2023: 2,279.6 tons, the largest increase in China’s history.
- China’s Sell-Off of U.S. Treasuries:
- 2014: $1.3 trillion in U.S. Treasury holdings → 2023: $800 billion (-40%).
- This poses a significant challenge to the $36 trillion U.S. national debt and threatens financial stability.
(2) The U.S. Response: Positioning Bitcoin as a Strategic Asset
- Trump declared that “Bitcoin is a competitor to gold, not the dollar,” and his administration took steps to support cryptocurrency adoption. This included appointing crypto-friendly regulators, such as Brian Brooks at the Office of the Comptroller of the Currency (OCC), who advanced policies allowing banks to provide cryptocurrency custody services. Additionally, the administration encouraged discussions on integrating digital assets into the financial system, laying the groundwork for Bitcoin’s increasing legitimacy as an asset class.
- The Trump administration considered Bitcoin as a reserve asset to maintain U.S. dominance in global finance.
- Criticism: Financial experts warn that Bitcoin’s volatility and lack of regulatory clarity make it a risky choice for national reserves.
5. Conclusion
- Tariffs are no longer just negotiation tools but serve as a key strategy for revenue generation and industrial protection.
- The financial war against China is intensifying as the yuan threatens the dollar’s supremacy.
- The global financial order is shifting as gold and Bitcoin become serious alternatives to the dollar.
- The U.S. is pivoting away from global hegemony, refocusing on regional dominance in the Americas.
- Trump’s strategy is to reshape the global economic order through aggressive trade policies and financial maneuvers.
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