Is Trump Severely Damaging the Status of the US Dollar? ECB Governing Council Member: His Policies and Unpredictability Are Undermining Confidence!

Francois Villeroy de Galhau, a member of the European Central Bank's Governing Council and Governor of the Bank of France, said on Wednesday that the recent policies of US President Donald Trump have undermined confidence in the US dollar.

In a recent interview, he stated, "The protectionism and unpredictability of the Trump administration are 'bad factors' for the US economy."

Earlier on Wednesday, shortly after aggressively implementing "reciprocal tariffs," Trump staged a "major reversal" on the global stage. He announced that he had authorized a 90-day tariff suspension for countries that do not take retaliatory actions. Trump stated that during this period, he would significantly reduce these countries' reciprocal tariffs to 10%, with the suspension taking effect immediately.

Villeroy commented, "A major factor in the consistency of US policy over the past few decades has been the attachment to the core position of the dollar. I believe the Trump administration shares this view, but it is very inconsistent in the way it practices this view. What has happened in recent days and weeks is not conducive to confidence in the dollar."

He added, "This could be a positive factor for the development of the euro's 'international role.'"

"Thank God, Europe created the euro 25 years ago. We have established our own monetary sovereignty, and we can manage our interest rates in a way different from the US, which was not possible before," he added.

Finally, Villeroy reiterated that he does not expect a recession in France.

On Wednesday, French Finance Minister Eric Lombard revised down France's economic growth forecast for 2025 from the previous 0.9% to 0.7%.

This is not the first time Villeroy has criticized Trump's tariff policies. He recently warned that the tariff policies have caused more damage to the US economy than to the rest of the world.

He stated at the time that although chaos was expected after Trump took office, the impact has proven to be greater than anticipated.

"This (tariff policy) is a shock to the world economy, and even more so to the US economy. It is first and foremost a tragedy for the US economy," he added.

Moreover, it is not just Villeroy. As Trump has been gradually severing ties with Western allies such as the EU and Canada, many experts have expressed concerns about the status of the dollar. Deutsche Bank recently warned that the US dollar may face a "crisis of confidence," while the euro's status as a global reserve currency will be enhanced.

Deutsche Bank strategist Tim Baker noted in a report that the euro is becoming a "substitute" for the US dollar. The eurozone is actively taking measures to increase the supply of safe assets, strengthen defense, and relax fiscal policies, all of which enhance the attractiveness of the euro as a safe-haven asset.