Former President Donald Trump recently threatened to impose 100% tariffs on countries abandoning the U.S. dollar, with the aim of reinforcing the dollar’s global dominance. Hao Hong, chief economist at GROW Investment Group, warned that such a strategy could be economically damaging for both the U.S. and China, potentially raising inflation in the U.S. while hurting China’s export sector, already weakened by overcapacity and slowing demand.
Hong emphasized the longstanding economic benefits the U.S. derives from the dollar’s role in international trade. However, he argued that imposing such tariffs on countries like China could backfire on American consumers, as it would likely lead to higher consumer prices on imported goods. As inflation increases, the U.S. trade deficit may shift towards nearby partners like Mexico and Canada, complicating economic relations with traditional allies.
Trump has also previously proposed a 60% tariff hike on all Chinese imports and a 10% blanket tariff on all U.S. imports, which economists warn could add significant strain to China’s economy and even lower its GDP by up to 2%. The economic repercussions of these tariffs could ultimately hurt both economies, triggering broader global inflationary pressures.
