BEIJING — In January, President Donald Trump took to Twitter to denounce Pakistan’s commitment to fighting terrorism. Twenty-four hours later, Pakistan’s central bank announced that it no longer would use the U.S. dollar in international transactions, and would instead switch to the Chinese yuan.

Four months later, in response to the Trump Administration’s withdrawal from the United States’ nuclear weapons pact with Iran, the European Union announced that it would use its own currency, the euro, to pay for Iranian crude oil.

Earlier this month, Moscow and Beijing announced a plan to use their own national currencies in bilateral trade. Russian President Vladimir Putin told reporters that the move would “increase the stability of banks’ servicing of export and import operations while there are ongoing risks on global markets.”

The Trump administration’s bellicosity has combined with the volatility of the global economy to sharply accelerate what has become an international movement: ditching the dollar as the world’s reserve currency. When Trump was inaugurated, the greenback was used in nearly 90 percent of all international transactions; today that figure has dropped to roughly two-thirds, according to Shabbir Razvi, the director of International Finance Solutions Associates. As the economist Peter Schiff told RT recently:

I think the world is in the process of trying to de-dollarize.”

Money makes the world go round, especially if you can print it

The prospect is an ominous one for a U.S. economy that many believe is closing in on perhaps the worst recession in history. International reserve status was closely tied to gold supplies and the British pound was the international reserve currency for all of the 19th century and half of the 20th — until the 1948 post-war conference In Bretton Woods, New Hampshire anointed the U.S. dollar as the primary currency for international trade.

When the Nixon Administration uncoupled the U.S. dollar from the gold standard, the U.S. brokered a deal to buy oil from Saudi Arabia and provide the kingdom with military aid and equipment in exchange for an agreement by the Saudis to invest petrodollar revenues back into U.S. Treasury bonds. Saudi Arabia held US$164.9 billion in U.S. government debt as of the end of June this year.

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The dollar’s special status is to U.S. hegemony what Samson’s hair was to his super strength. If the dollar were to be replaced as the international reserve currency, the U.S. could no longer pay its bills simply by printing more money. The result, for a country that is no longer the world’s dominant exporter on the international market, could cause the economy to freeze up, and possibly produce apocalyptic shortages of fuel and food.

The prime beneficiary of the dollar’s decline is clearly China.

Ring out the buck, ring in the yuan

As of the end of the second quarter, overseas institutional and individual holdings of yuan-denominated financial assets totaled 4.9 trillion yuan — roughly $717 billion — according to ICBC International, the Hong Kong investment banking arm of Industrial and Commercial Bank of China, one the country’s big-four banks. The share of yuan-denominated stocks and bonds as a percentage of total assets held by global investors increased to about 2.5 per cent and 3.0 per cent, respectively from the year-ago period.

Putin has been publicly calling for the international community to rethink the dollar as the international reserve for more than a decade — before the collapse of the housing market in 2008 triggered a global recession — but Trump’s belligerent foreign policy and restoration of trade tariffs with China, Canada and the EU has caused much of the world to join the conversation.

Kay Van Petersen — global macro strategist at Saxo Capital Markets, based in Singapore — told reporters:

The unintended consequence of the U.S. fighting across multiple fronts drills home the point that the world needs an alternative to the U.S. dollar for trade and transfers. If anything, the trade war will lead to a redoubling of efforts on the structural roll-out of the yuan to echo this internationalisation theme.”

The use of the yuan outside mainland China soared for a period after the global financial crisis in 2008, but quickly declined until picking up again this year. But replacing the dollar with the yuan is clearly part of Beijing’s long-term strategy, as the leadership pressures trading partners to accept the yuan as payment for Chinese exports.

In 2014, China linked the Hong Kong stock market with the Shanghai exchange, and in 2016, began allowing foreigners to invest in mainland Chinese capital markets. The Chinese authorities also launched yuan-denominated gold contracts on the Hong Kong and Dubai exchanges last year, as well as new “Petroyuan” oil-futures contracts on the Shanghai International Energy Exchange in March this year.

Many economists believe that it is inevitable that China, the world’s largest oil importer, will unseat the U.S. as the world’s financial superpower. In retaliation for the Trump administration’s restoration of tariffs on Chinese imports, the country has slapped tariffs on $50 billion worth of U.S. goods.

Said Hayden Briscoe, head of Asia-Pacific fixed income at UBS Asset Management:

We now think these oil [-producing] countries, who are selling oil into these contracts and are getting paid in yuans, are starting to recycle their profits back into Chinese government bonds, and this is going to continue for decades.”

Financiers are well aware of strategies to dethrone the U.S. dollar and the impact that will have on Wall Street. There is no shortage of economists and political scientists who believe that it was Muammar Gaddafi’s proposal to create a gold-backed pan-African currency that led to the Obama administration’s military intervention to topple the Libyan dictator’s government. The decline of the dollar will likely take years to complete but it mirrors the decline of the U.S. as the world’s lone superpower. As one economist told the RT network recently:

Eventually, the evolution of global finance will be very much related to the evolution of the global balance of power. This will not happen overnight. It will take time and many more crises and balance shifts. No one really knows what the new system will look like.”

Top Photo | A man walks past a poster showing a U.S. dollar outside an exchange office in Cairo, Egypt, Nov. 3, 2016. Amr Nabil | AP

Jon Jeter is a published book author and two-time Pulitzer Prize finalist with more than 20 years of journalistic experience. He is a former Washington Post bureau chief and award-winning foreign correspondent on two continents, as well as a former radio and television producer for Chicago Public Media’s “This American Life.”