JD Vance Wants To Ditch The Dollar's Reserve Status

JD Vance Wants To Ditch The Dollar’s Reserve Status

Cheap goods aren't the crisis Vance says they are, and the fix he's proposing may be worse than the problem he's diagnosed

Reserve status provides cheap imports and enables US borrowing, contrary to Vance's claims.
Vance uses reserve status to justify tariffs, which raise prices for consumers.
Weakening the dollar would push allies closer to China, undermining US interests.

Vice President Vance Leads Congressional Roundtable On Anti-Fraud Initiatives — Source: Alex Wong / Getty

JD Vance Wants To Ditch The Dollar’s Reserve Status

Tony Katz isn’t buying what JD Vance is selling on the dollar. “What is he talking about?” Katz said, reacting to the vice president’s recent comments questioning whether America should even want to be the world’s reserve currency. “And then why is he talking about it?”

Vance has argued that reserve currency status is a raw deal — that it floods the country with “mostly useless imports,” hollows out domestic manufacturing, and effectively taxes American producers to subsidize American consumers. Katz brought in Phil Magness, the David J. Theroux Chair in Political Economy at the Independent Institute, to pressure-test the argument. Translation: Katz wanted to know if any of it actually holds up. It mostly didn’t.

Magness laid out the basics first: the dollar has been the world’s reserve currency since the end of World War II, a status built on decades of confidence in American monetary stability. It’s why foreign countries hold Treasuries, why imports are cheap, and why the U.S. can borrow the way it does. Vance leans on something called the Triffin dilemma to argue the arrangement traps America in permanent trade deficits — except, Magness noted, that dilemma applied to the fixed-exchange-rate Bretton Woods system, which the U.S. blew up in the 1970s. It doesn’t really apply anymore.

So what is Vance actually doing? According to Magness, building an economic case for the protectionist tariffs he already wanted. “He always comes back to the same point,” Magness said — that cheap imports are the enemy, and reserve currency status just makes the “problem” worse. Magness compared the whole grievance to “an alcoholic blaming the bottle of beer for his alcoholism.” The dollar isn’t the disease. The tariffs, he warned, are already showing up in higher checkout and gas-pump prices — the exact pain people are voting on.

Katz pushed further, connecting Vance’s economic isolationism to a broader worldview: less global entanglement, less trade, less involvement, period. Magness agreed the U.S. shouldn’t be the world’s policeman — but said torching the dollar’s status and slapping tariffs on Canada, one of America’s oldest and friendliest trading partners, isn’t restraint. It’s “complete insanity,” he said, that only pushes allies closer to China.

Katz’s bottom line: cheap goods aren’t the crisis Vance says they are, and the fix he’s proposing may be worse than the problem he’s diagnosed.

Hear Tony Katz break it down live weekdays on Tony Katz Today on WIBC 93.1 FM, or catch the full segment on-demand.