The sky isn't falling. While the media paints a grim picture of Trump's trade war decimating the dollar, I see a different story unfolding – one where these policies, however controversial, could ultimately strengthen the greenback. Hear me out.

Reshoring Could Revitalize Dollar Demand

Everyone hones in on the short-term effects of tariffs – increasing costs to consumers, damaging goodwill with our trading partners. What about the long game? Whether by design or accident, Trump’s trade war undoubtedly pushed companies to reconsider global supply chains. The outcome? A renewed effort to return manufacturing to the United States.

Reshoring isn't just about jobs. It's about dollar demand. When companies bring production of goods back to the U.S., they require more dollars to pay American workers, buy materials and supplies, and invest in infrastructure. This increase in domestic economic activity may be less apparent, but it directly pushes up the dollar’s value. Think of it this way: every widget stamped "Made in the USA" is a vote of confidence for our currency.

Critics will say reshoring is too expensive. But consider the hidden costs of relying on foreign supply chains: transportation, communication barriers, intellectual property theft, and geopolitical instability. These considerations, frequently overlooked in classic regulatory cost-benefit analysis, tip the scales in favor of closer domestic production more than people think.

Less Foreign Reliance, More Dollar Strength

Dalio’s correct – the U.S.’s de-coupling from competitive manufacturing was indeed unsustainable. Rather than giving in to defeat, Trump’s trade war shook the system. It challenged us to deal with it honestly.

A weaker dollar isn’t necessarily an unqualified positive. Promising to boost exports would be a much easier sell in the short term. It’s a backdoor policy that erodes our purchasing power and makes us more vulnerable to foreign economic shocks. It will improve the U.S. economy by reducing our dependence on foreign goods. Because of that, the dollar will be in a much stronger position.

This doesn't mean complete isolationism. It requires focusing domestic production in sectors that matter strategically, but economically as well, particularly technology, defense, and energy. America is a stronger economy, a more self-sufficient economy, and a more self-sufficient economy is a stronger dollar.

Fairer Trade, Fairer Dollar Value

Let's be honest: some of our trading partners haven't always played fair. Currency manipulation, IP theft, and gross labor abuses have all provided an unfair competitive advantage to our trading adversaries. These actions hurt American competitiveness and further distort the real value of the dollar. As a parent, I was enraged to hear about these rigged games!

Trump’s trade war, however you view his approach, did push back against these practices. By threatening domestic industry with aggressive tariffs, he brought these nations to the table, insisting that they accept a level playing field. The aim was not merely punitive. In many ways, it was designed to remedy the imbalances that had been artificially keeping the dollar low for decades.

A genuinely equitable trade landscape does justice to the dollar’s economic fundamentals. It gets rid of the artificial, man-made distortions that have permitted other currencies to cheat us and get an unfair competitive edge.

Trade War Spurs Tech Innovation

It's an unexpected connection, I know. But think about it. The trade war provided a wake-up call and helped increase urgency, forcing American companies to make the hard choices, innovate, and compete in new ways. I think Jeremy Allaire’s argument on the need for technological competitiveness is right on the money.

This pressure to innovate benefits the dollar in two ways. First, it expands production of new, high-value products and services that can be exported, increasing demand for dollars. Secondly, it strengthens the U.S.’s role as a global technology leader. This absorption of global excess savings only exacerbates the upward pressure it places on the dollar.

What’s more, Allaire notes that the recent growth of stablecoins could be a boon to the dollar’s international domination. Dollar-backed stablecoins provide a low-volatility digital option that complements a more fluctuant local currency. As such, they stand to achieve rapid and international adoption, particularly in nations with volatile currencies. This new demand for digital dollars would only further bolster the larger dollar ecosystem.

Regulatory Clarity is Key

Senator Gillibrand’s instinct is correct – we absolutely need comprehensive and clear regulations for crypto. As we’ve written, the trade war imposes enormous costs. It calls for the Treasury to lean into innovation, as well as address concerns and risks related to the dollar’s future.

Healthy, regulated crypto markets can help spur new investments, create new American jobs, and further secure the dollar’s standing as the world’s dominant reserve currency. It cannot fully protect against money laundering and protect consumers in the way it should. In this way, all Americans benefit from the promise of digital currencies.

If we do not take the initiative to act, then we are going to get left behind. Meanwhile, other countries are moving quickly to develop their own digital currencies. If the U.S. doesn’t keep up, we put our leadership—and jobs—at stake. To keep the dollar’s dominance in the digital age, a sure regulatory baseline will be requisite.

I'm not saying the trade war was a flawless strategy. It caused pain and disruption. The reality is that occasionally some pain is required in order to deliver the long-term gain. I personally view the trade war as a very effective spark for this change. It makes us deal with our economic fundamental and what I believe will ultimately make the dollar stronger in the world. Now it’s time to look beyond the headlines and down at the real achievement. Even better, this has created new opportunities for us. Now we’re able to really take a deeper plunge into the blockchain and cryptocurrency space!

Italicized words are for emphasis.