The US dollar’s grip on global finance is under attack, and Trump is making sure it stays in control. China, Hong Kong, Thailand, the UAE, and Saudi Arabia have been quietly building a cross-border central bank digital currency (CBDC) called mBridge, designed to let them trade without needing US dollars or SWIFT.
The Bank for International Settlements (BIS) initially backed the project, but just before the US election, the BIS suddenly pulled out. Officials claimed it had reached a “minimal viable product” stage, but according to a report from the Financial Times, Washington forced them to back off.
More specifically, last autumn, just before the US election, the BIS unexpectedly pulled out of mBridge, in effect ceding control to China and the rest. BIS claimed this was just because it had reached “minimal viable product” stage. But few believe this. “The Americans demanded [the BIS] stop because it’s a threat,” one participant tells me, explaining that Washington worried that “it might be used to evade [dollar] sanctions”.
The decision came right before Trump returned to power, and his administration is cracking down on anything that threatens the dollar’s dominance.
Trump moves to block dollar alternatives
Trump has said via many Truth Social posts that any country trying to weaken the dollar will face consequences. He posted a warning that: “The idea that the BRICS countries are trying to move away from the dollar, while we stand by and watch, is OVER. We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US dollar. If not, they will face 100 per cent tariffs and should expect to say goodbye to selling into the wonderful US economy.”
While trade policy has been getting most of the attention, financial warfare is unfolding in the background. The US dollar underpins America’s global power, and Trump isn’t letting that slip.
On paper, the dollar still dominates. The IMF reports that 58% of central bank reserves are held in dollars. That’s lower than two decades ago, but the change has mostly been toward smaller currencies, not major rivals like the euro or yuan. The SWIFT network shows that 49.1% of global transactions last year were in dollars—a 12-year high.
Central banks are hoarding gold at record levels, according to the World Gold Council, signaling that some are hedging against the dollar. At the same time, China is expanding its alternative payment system, CIPS (Cross-Border Interbank Payment System), which has 160 member banks and saw an 80% increase in transactions since 2022. Meanwhile, US financial sanctions have pushed countries to look for alternative trading channels, leading to increased interest in CBDCs.
This is eminently sensible. But Trump seems minded to use sticks. Last month he issued an executive order banning any central bank digital currency usage in America, since they “threaten the stability of the financial system, individual privacy, and the sovereignty of the United States”.
Trump also endorsed Bitcoin, despite its reputation as a hedge against the dollar, and most importantly, he threw his support behind dollar-backed stablecoins, calling for their global expansion.
Some questioned why Trump would support stablecoins, given that the European Central Bank (ECB) has openly opposed them. Stablecoins, unlike CBDCs, expand the use of the dollar, not replace it. The idea is simple: if offshore stablecoins can be used everywhere, then more transactions will be tied to the US dollar—even outside the US banking system.
Howard Lutnick, Trump’s pick for commerce secretary, has deep ties to the Tether stablecoin, which has the highest market cap among stablecoins. During his Senate hearing, Senator Elizabeth Warren said the Tether connection is a conflict of interest, but Howard got confirmed anyway.
The stablecoin market is worth about $220 billion at press time, which is only a fraction of the $6 trillion in US capital markets.
In a post on X today, Trump said, “I am in serious discussions with President Vladimir Putin of Russia concerning the ending of the War, and also major Economic Development transactions which will take place between the United States and Russia. Talks are proceeding very well!”
America’s economy now runs on the spending of the top 10%
While most Americans struggle with high prices and stubborn inflation, the wealthiest 10% are spending freely, driving an economy that now relies more than ever on their ability—and willingness—to keep buying.
Households earning $250,000 or more per year are splurging on luxury vacations, designer goods, and real estate, fueled by surging stock prices and rising home values. According to Moody’s Analytics, this group now accounts for 49.7% of all consumer spending—the highest level on record since data collection began in 1989.
Three decades ago, the top 10% made up just 36% of total spending. Today, their purchases alone make up nearly one-third of U.S. GDP, Moody’s chief economist Mark Zandi estimated.
The rich are spending more while everyone else pulls back
From September 2023 to September 2024, the top 10% increased their spending by 12%. During that same period, middle- and working-class households cut back.
“The finances of the well-to-do have never been better, their spending never stronger, and the economy never more dependent on that group,” Zandi said, based on an analysis of Federal Reserve data through Q3 2024—the most recent available.
While inflation has hit everyone, the wealthiest Americans have far outpaced it. The bottom 80% of earners spent 25% more than they did four years ago, barely keeping up with a 21% increase in prices over that period. The top 10%? They spent 58% more.
If the stock market slumps or home values drop, the confidence of the wealthy could take a hit, leading them to spend less—and dragging the economy down with them.
Consumer sentiment is already starting to slide, even among the wealthiest third of households, partly due to rising tariff concerns and economic uncertainty.
Zandi pointed out that America’s wealthiest tend to be older, more educated, and deeply invested in stocks and real estate—sectors that have boomed in recent years. But that same surge in asset values is also widening the wealth gap, making life harder for those who don’t own homes or stocks.
How high earners are pulling ahead
For many of the top earners, financial security came from strategic investments during the pandemic.
Vivek Trivedi, 38, is one of them. He saved up during COVID-19, then bought three investment properties in Indianapolis between 2022 and 2023.
His own mortgage payment remains low, thanks to a sub-3% interest rate he locked in when refinancing during the pandemic.
Trivedi and his wife, Purva, both work in pharmaceuticals and now make over $350,000 per year—45% more than before the pandemic. They also support his parents, who live with them, while raising two young children.
For families like the Trivedis, rising income and asset values have made inflation less painful. But for millions of others, the gap between those who have wealth and those who don’t is wider than ever—and America’s economy is now riding on the spending habits of a shrinking elite.
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