Trump has threatened tariffs against countries moving away from the dollar. Here’s what to know about the efforts to dethrone the greenback.

President-elect Donald Trump in Michigan during the 2024 campaign 

President-elect Donald Trump issued a new tariff threat in a Sunday evening post on Truth Social, this time taking aim at the group of countries that have been working to move away from the US dollar as a reserve currency and hit at its dominance in international trade.

Behind his threat is the trend of “de-dollarization,” which has gained momentum in recent years as some countries look to lessen their dependence on the dollar. For nearly 80 years, the US dollar has dominated international reserves and served as the main currency used in global trade.

But a growing list of countries – including Brazil, China, and Russia – are trying to unseat the greenback.

Here’s everything you need to know about de-dollarization.

What is de-dollarization?

The greenback is the global economy’s dominant reserve currency – meaning that it’s the main currency held by the world’s central banks.

The Bretton Woods Agreement at the end of World War II also established the dollar as the primary currency of international trade, which is why futures contracts for commodities like crude oil and natural gas are almost always priced in dollars.

That’s a massive source of economic power for the US.

For example, the greenback’s dominance allowed Washington to freeze half of Russia’s foreign currency reserves and ban its biggest banks from the SWIFT international payments system after Vladimir Putin ordered the invasion Ukraine in February 2022.

De-dollarization is the movement by some countries to reduce their reliance on the dollar in cross-border trade and investments – often with the goal of undermining the US.

How are other countries trying to unseat the dollar?

Rival countries China and Russia are spearheading the effort to wean the world off the US currency.

China, for example, called for suppliers in the Middle East to accept its own currency rather than the dollar in oil trades in December 2023. Credit Suisse analyst Zoltan Pozsar said last year that President Xi Jinping’s trip to Saudi Arabia signaled “the birth of the petroyuan.”

Meanwhile, Russia has stepped up its de-dollarization efforts since invading Ukraine, with Putin signing an executive order in March 2022 that forbade “unfriendly” countries from settling natural gas contracts in any currency other than the ruble.

Beijing and Moscow have also repeatedly pledged – alongside the other members of the BRICS group of countries – to launch a new reserve currency they hope could unseat the dollar as an international reserve.

At a BRICS summit earlier this year, Russia’s foreign minister said a group of emerging markets countries is working on a non-dollar payments system that could take the form of a digital platform to allow for more trade and lending in their own currencies.

Should the US be worried?

There’s some evidence that the world is slowly weaning itself off the dollar, with the greenback’s weight in foreign exchange reserves falling from 71% to about 59% since the turn of the century, according to the International Monetary Fund.

Brazil also announced on March 31 that the Chinese yuan had displaced the euro as the second-largest currency in its foreign reserves, stoking fears that the dollar’s reserve status could be threatened.

However, despite China’s de-dollarization push, the yuan still accounts for just 2.7% of all foreign exchange reserves, according to the IMF, and analysts believe it’s unlikely that a rival currency will unseat the buck anytime soon.

Goldman Sachs said in a research note last year that the yuan – which is pegged to the dollar and tightly managed by a government that has a frayed relationship with much of the West – will always struggle to clear the “high hurdles to attain the top status of the global transaction currency.”

“There is a lot of inertia in reserve currency status,” a team of strategists led by Kamakshya Trivedi said. “So far, and likely for a long time to come, attempts at de-dollarization remain contained and constrained.”

While Trump’s latest threats show he’s concerned about the dollar’s continued strength, the trend of de-dollarization hasn’t done much to impact the greenback’s status as the main reserve currency of central banks or its dominance in global trade.