Economist Kenneth Rogoff Believes Trump’s Trade Policy Is Speeding Up Dollar’s Decline, Calls Navarro President’s ‘Rasputin’

Economist Kenneth Rogoff believes that the U.S. dollar's dominance is eroding, and President Donald Trump’s chaotic trade policies and attacks on institutions are speeding up the decline.

In an article in The Economist, Rogoff pointed to Trump and his trade adviser Peter Navarro, whom he called the president’s “Rasputin,” for creating economic “havoc” on a global scale.

While the dollar remains the world’s leading reserve currency, Rogoff argued it is gradually ceding ground to rivals, including the euro, China’s yuan, and cryptocurrency. 

“Cryptocurrencies will do the same in the underground economy, which is roughly a fifth of global GDP,” he wrote.

As global demand for dollars diminishes, Rogoff warned that U.S. borrowing costs will likely rise and Washington’s ability to enforce financial sanctions, like Trump’s trade tariffs, could weaken. 

He said the trend is already visible, particularly in Asia, where China is expanding its influence and regional trade is increasingly conducted in yuan. European efforts to launch a digital euro further reflect the global shift.

“By this measure, dollar dominance peaked around 2015, after which China gradually began to make its currency more flexible,” he wrote.

Moreover, America’s growing debt, political pressure on the Federal Reserve, and Trump’s threats to the rule of law will likely make foreign investors more wary of holding dollar assets.

Warren Buffett on Saturday stated similar concerns. “Obviously, we wouldn’t want to be owning anything that we thought was in a currency that was really going to hell,” he said.

While mentioning that the dollar’s decline began before Trump, Rogoff cited Trump’s aggressive trade policies, isolationist stance, attack on institutions like the Fed, and legal immigration as accelerating the trend. 

“Unless Mr Trump reins in his chaotic trade policy—he could start by firing his Rasputin—America’s luck looks set to run out,” Rogoff wrote.

The U.S. Dollar Index (DXY) was down 0.4% in morning trade on Tuesday. The index has fallen over 8% year-to-date.

U.S. equity markets were also trading in the red ahead of the Fed’s two-day meeting on Tuesday. 

The SPDR S&P 500 ETF Trust (SPY) was down 0.6% in morning trade, the Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100, fell 0.8%, and the SPDR Dow Jones Industrial Average ETF (DIA) dropped 0.5%.

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