Donald Trump's Iran war has weakened America's most potent non-military lever of power, according to Nobel Prize-winning economist Paul Krugman, who warned in a late June column that the prolonged conflict has exposed cracks in the dominance of the US dollar. Writing as the war entered its fourth month with no clear end in sight, Krugman argued that the fallout is already reshaping how countries conduct global finance and sidestep US influence.
The US dollar has held its position as the world's reserve currency since the 1944 Bretton Woods Agreement, a system that cemented America's financial leadership in the aftermath of World War II. That dominance has long allowed Washington to exert pressure globally through sanctions and financial restrictions. Krugman's assessment suggests that this long-standing advantage is no longer as secure as it once seemed.
