Western Tensions and Pressure on the Fed Open Unexpected Opportunities for China

Confidence in the US dollar is facing significant challenges as political developments in Washington raise concerns about the independence of the Federal Reserve (Fed), while geopolitical tensions with Europe continue to escalate. In this context, China emerges as an indirect beneficiary as the world increasingly seeks alternatives to reduce dependence on the US-led financial system. Is the US dollar being questioned amid political turmoil? In recent weeks, decisions and statements from the White House have created a new wave of instability in the global financial markets. The US dollar – the cornerstone of the international monetary system – is most noticeably affected. The focus of attention is the criminal investigation into Fed Chair Jerome Powell. This move is seen by many observers as an attempt to pressure the Fed to cut interest rates, despite economic data and the official stance of the Federal Open Market Committee indicating no urgent need for policy easing. Historically, it is not the first time a US president has disagreed with the Fed on policy direction. However, direct involvement by the Department of Justice is a rare and serious escalation. This raises concerns about the independence of the central bank – a fundamental factor ensuring confidence in the US dollar. As a result, investors are beginning to question: will the world’s primary reserve currency maintain its stability as before? U.S. – Europe Rift Increasing Instability Not only under internal pressure, the US also faces escalating tensions with the European Union. Transatlantic relations, long considered a pillar of the Western order, are showing cracks since President Donald Trump returned to power. Disputes over Greenland have escalated tensions to a new level. After European leaders rejected US access to this semi-autonomous territory, Trump responded by threatening a 10% tariff on goods from eight European countries. In turn, the EU is preparing retaliatory measures, with a meeting of the 27 member leaders scheduled to discuss a common response. Trade tensions, the risk of retaliation, and an adversarial atmosphere increase geopolitical risks. This not only disrupts supply chains but also weakens confidence in the stability of the economic order led by the US and Europe. China quietly seizing the opportunity While the West faces fractures and institutional doubts, China is in a favorable position to expand its global financial influence. In fact, Beijing has been preparing for this scenario for many years. China has continuously promoted trade payments in yuan, developed its own cross-border payment system, and encouraged partners to use its currency in international transactions. The core goal of this strategy is not to overthrow the US dollar’s role overnight but to create an additional option for countries seeking to reduce dependence on the US-controlled financial system. In the context of shaken confidence in US institutions and less cohesive US-EU relations, China’s initiatives become more attractive than ever. With many economies concerned about sanctions, trade disruptions, and policy volatility, China’s financial system can be viewed as a strategic “backup plan.” A Multipolar Financial Order in Formation The relative decline in confidence in the US dollar does not mean the US’s role will be replaced soon. However, diversification trends are becoming increasingly evident. Instead of placing all trust in a single financial hub, many countries are diversifying risk by expanding the use of different currencies and payment systems. In this landscape, China emerges as a new financial pole – not to dominate, but to provide additional options. Ironically, the power struggles and tough policies from Washington have inadvertently created a gap for Beijing to gradually expand its influence. While the West is busy with internal conflicts and trade disputes, China has the opportunity to “take it slow but steady,” consolidating its position in the shifting financial order. Conclusion The world is entering a new phase of uncertainty, where confidence in traditional pillars like the US dollar and Western institutions is no longer absolute. In this context, China—with its long-term financial strategy and flexible approach—is emerging as an indirect beneficiary of the tensions created by the US. The global financial order may not change immediately, but the pieces of a multipolar structure are gradually coming together. And in this new picture, Beijing is quietly laying the first bricks.