How Trump-Era Policies and the Federal Reserve Are Amazingly Cementing U.S. Dollar Dominance Despite BRICS Resistance

As the global financial chessboard shifts in response to multi-polar ambitions and rising nationalist economies, one truth continues to assert itself: the United States, backed by the strength of its institutions and the global demand for the U.S. dollar, remains the dominant economic power. In the latest iteration of this geopolitical saga, Donald Trump’s policy framework—marked by protectionism, aggressive trade positioning, and strong support for domestic growth—ironically reinforces the very foundation of U.S. financial dominance.

At the core of this sustained dominance lies a single institution: the U.S. Federal Reserve.

The Federal Reserve’s Silent Power

While elected officials like Trump dictate the tone of America’s economic posture, the Federal Reserve continues to hold the reins of global financial power. Through interest rate policy, dollar liquidity management, and market signaling, the Fed influences capital flows not just within the U.S., but across every continent.

When the Fed raises interest rates, global capital gets pulled toward higher-yielding U.S. Treasury assets. This “flight to quality” strengthens the dollar, causes ripples in emerging market economies, and increases borrowing costs worldwide—even for countries borrowing in their own currencies. In essence, the Fed doesn’t just move the U.S. economy—it moves the world.

And under Trump-style policies that emphasize low taxes, deregulation, energy independence, and fiscal stimulus, the likelihood of higher domestic inflation and growth expectations remain strong. This gives the Fed cover to maintain elevated interest rates, ensuring a continued inflow of capital into U.S. markets, reinforcing dollar supremacy.

BRICS and the Currency War

China, leading the BRICS coalition, has been on a mission to challenge the dollar’s global role. Through the New Development Bank (NDB), bilateral trade in local currencies, and the internationalization of the yuan, Beijing has attempted to build an alternative monetary framework free from dollar constraints.

Yet despite these efforts, BRICS has not created a truly fungible or liquid alternative to the dollar. Loans in local currency from the NDB may reduce short-term dollar exposure, but they do not shield borrowers from the dollar’s gravitational pull. Whether it’s because of commodity pricing, trade settlements, or capital flight during crises, the U.S. dollar remains the currency of trust.

Moreover, China’s own internal constraints—capital controls, weak transparency, and dependence on U.S. markets—limit the yuan’s appeal. And other BRICS members like Brazil, South Africa, and India still rely on U.S. dollar markets for reserves and trade financing.

Trump’s Dollar Paradox

Interestingly, Trump-era protectionist policies—tariffs, supply chain re-shoring, and financial decoupling from China—may seem to threaten globalization. But they actually reinforce trust in the U.S. economic system.

By attempting to make America more economically self-reliant, Trump indirectly boosts the perceived safety of the dollar. Investors know that even in crisis, the U.S. has the tools, institutions, and credibility to defend its currency and markets.

The result? A counterintuitive strengthening of the very system BRICS is trying to dismantle.

Why the U.S. Dollar May Strengthen Even Further

While BRICS nations seek to reshape the global monetary order, real-world conditions continue to align in favor of the U.S. dollar. A strong dollar scenario in the coming years is not only plausible—it’s increasingly likely. Several converging factors are setting the stage for continued dollar strength, reinforcing the conclusions drawn earlier.

Persistent U.S. Inflation or a Tight Federal Reserve

If U.S. inflation proves sticky due to structural factors—like re-shoring, energy policy, or labor tightness—the Federal Reserve will be compelled to maintain a hawkish stance. Higher interest rates make dollar-denominated assets more attractive, pulling global capital into U.S. bonds and equities. This naturally increases demand for dollars, even among countries seeking alternatives.

Global Risk Aversion or Conflict

Geopolitical instability—from war in Ukraine to tensions in the Taiwan Strait—could trigger waves of risk aversion. In such moments, investors flee to safety, and the U.S. dollar remains the world’s most trusted safe haven. The more chaotic the world becomes, the more valuable the dollar appears.

Weak Growth Abroad

China’s real estate troubles, demographic headwinds, and Europe’s energy vulnerabilities all point to sluggish growth outside the U.S. When the rest of the world under-performs, capital seeks more resilient markets—and the U.S. remains at the top of that list. As a result, the dollar gains simply by being the “least dirty shirt” in a struggling global economy.

A Shrinking Global Dollar Supply or Rising Demand

As the Federal Reserve unwinds its balance sheet and global dollar liquidity tightens, fewer dollars are available worldwide. At the same time, countries with dollar-denominated trade, reserves, or debt are forced to compete for a smaller pool of dollars, raising its value. Even BRICS economies, while advocating for de-dollarization, still rely heavily on the dollar for external trade and investment.

In the Dollar We Trust

The battle to dethrone the U.S. dollar is far from over—but the results so far are clear. The Federal Reserve remains the single most powerful financial institution in the world, and Trump’s aggressive, America-first economic approach may actually entrench that power rather than weaken it.

As China and BRICS attempt to rewrite the rules of global finance, the U.S. continues to play the game from a position of unmatched leverage—with the dollar as its king, the Fed as its queen, and a global audience still betting on red, white, and blue.