Over the coming few weeks, alongside the regular coverage of the Clark Center’s polls and other news, On Global Markets will be reporting on the discussions held at the Economic Experts Conference 9/10 October. Most of those sessions were held under the Chatham House Rule.
While tariffs have, understandably, dominated discussion of trade policy in 2025, it makes little sense to consider them in isolation from the global financial system, the nature of global economic integration, or, indeed, from wider questions of geopolitics. Much of the debate in the session on global trade at the Clark Center’s recent Economic Experts Conference focused on these wider questions.
The US Experts Panel was first asked about the global role of the dollar back in 2018. Back then, they were asked whether “Because of the many special and unique roles that the dollar plays in global commerce, US citizens are substantially better off than they otherwise would be”? Weighted by confidence, 28% of respondents strongly agreed with the proposition, and another 45% agreed.
Related questions have come more recently with an increasing frequency in 2025. The broad consensus of the experts, according to the polls, is that a sustained decline in the dollar’s global market share would be a substantial negative for US consumers and that a permanently weaker dollar would substantially raise US government borrowing costs.
One participant at the conference slightly objected to this framing. In their view, the real question is not ‘does the global role of the dollar increase the welfare of US citizens?’ but instead ‘does the global role of the dollar increase the welfare of global citizens?’. And here they believed the answer was a firm yes. A dominant currency, in this case the dollar, is, they argued, a good thing for the world. It eases the flow of trade and helps global financial markets to be more integrated. Greater market integration is, in general, a good thing, leading to better outcomes globally, not just for the United States.
On the more specific question of whether or not the global role of the dollar is a net positive for the United States, two competing narratives exist. One narrative, as one participant noted by the majority of economists, argues that it is. Another, shared by some but not all members of the current administration, argues that it is not.
The current administration’s view is not straightforward to analyse. At times members of the government have argued that maintaining the dollar’s global role is ‘essential’ and even threatened retaliation against countries seeking alternatives, while figures such as Stephen Miran (now a Fed governor), the Vice President and sometimes the President himself have argued that the dollar’s global role has boosted its value, driven the trade deficit, and cost the United States manufacturing jobs.
The more conventional view is that the global role of the dollar brings at least three distinctive benefits to the United States. Firstly, the depth and liquidity of dollar markets likely reduce government borrowing costs. Although, as was noted in the debate, the exact size of this benefit is hard to quantify. It is unlikely, in the view of at least one participant, that Federal borrowing costs would be as much as two percentage points higher in the absence of the dollar’s special status. Secondly, a stronger dollar improves the terms of trade facing US firms and consumers and boosts their purchasing power. Finally, the centrality of the dollar to global finance brings with it increased geopolitical power and reach.
It was noted in the discussion that questions about what a loss of the dollar’s reserve status would mean for the United States are, by their very nature, difficult to answer. The kind of events which would lead to the dollar losing its reserve status are, almost by definition, events and shocks which would already be ‘cataclysmic’ for the American economy.
Some of the most interesting debates in the session came as the discussion turned back towards wider trade policy. And in particular to the vexed question of retaliation. In March, a poll of the US Expert Panel showed a deep division on the question of retaliation. Asked whether “the threat of retaliation against the imposition of higher tariffs on a country’s exports substantially lowers the probability of a trade war” and then whether “in the event that the threat of retaliation does not deter the imposition of tariffs, the economies of countries subject to higher tariffs on their exports would be measurably better off by responding with targeted tariffs on imports from the first mover” the panel was unsure. In both cases, a plurality of respondents, weighted by confidence levels, expressed uncertainty, with roughly even numbers of the rest expressing agreement or disagreement.
Since that poll was posed, most countries have chosen, essentially, not to respond to US tariffs. The ‘telling exception’, in the words of one conference participant, has been China. Which has responded measure for measure to US tariffs and trade restrictions and seems, in the main, to have been vindicated by lower US duties.
Trade policy since March has been a useful empirical reminder that this is a complex policy area, in which far more than trade flows are at play. Europe may have posed the potential, on paper at least, to respond to US tariffs with damaging countermeasures, but clearly did not believe that trade policy could be seen as a discrete part of a wider relationship. The need to keep the United States involved in Ukraine and security concerns perhaps meant that the EU was prepared to put up with a bad deal on tariffs.
The case of Korea is even more striking, with Seoul not only accepting a baseline tariff of 15% (with some sectors charged at higher rates) but also agreeing to contribute hundreds of billions of dollars to an investment fund in the United States. Tariffs, in the view of several conference participants, are sometimes a cloak to discuss much wider global economic and geopolitical issues. In the case of Korea, Japan, and the EU, the need to maintain US security guarantees has allowed the US to apply more (non-economic) pressure to secure better economic outcomes. In the case of Brazil and Colombia, tariffs have been expressly tied to other, non-economic, priorities of the current administration.
Tariffs then, together with the global role of the dollar, are perhaps best seen as part of a complex geopolitical and geoeconomic picture rather than being viewed in isolation.
