US Domestic Policies May Threaten Dollar's Longterm Status: Former US Treasury Official

By Harry Wu, 21st Century Business Herald, SFC

The US dollar has plummeted this year as global trust in it has wavered. “There is a risk that US policies, including and in particular US domestic economic policies, could raise additional questions about the longer term status of the dollar, ” said Jeffrey Schott, Senior Fellow at the Peterson Institute for International Economics.

At the 2025 Bund Summit, Schott told 21st Century Business Herald that “the dollar is the dominant reserve currency in the international system, but it doesn't mean that it can’t change. The pound sterling was the dominant currency in a previous era, but policies of the government led to a reduction in the influence of that currency in international financial matters.”

From the General Agreement on Tariffs and Trade (GATT) to the World Trade Organization (WTO), and now to the headwinds facing globalization, Schott said the biggest difficulty facing multilateral negotiations today is a lack of trust in implementation. If WTO member states lack confidence that agreements will be faithfully implemented, they will be unwilling to assume new obligations at the multilateral level, which explains the continued expansion of regional and bilateral agreements.

The US withdrawal from the Trans-Pacific Partnership (TPP) was a “big mistake，” Schott said, while the subsequent Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) incorporates many improvements to the existing trade system and increases transparency in policies related to goods, services, and investment. The 12 countries that joined the CPTPP “are getting additional benefits”, he added.

Asked whether the US will rejoin the CPTPP, Schott stated that he does not believe the US government will restart the process anytime soon.

Schott joined the Peterson Institute for International Economics in 1983 and is a senior fellow working on international trade policy and economic sanctions. He was an official of the US Treasury Department (1974–82) in international trade and energy policy. During the Tokyo Round of multilateral trade negotiations, he was a member of the US delegation that negotiated the GATT Subsidies Code.