# Fiscal Dominance Unleashed: Trump 2.0 and Rising Global Economic Risks

- Link: https://www.thailand-business-news.com/business/245113-fiscal-dominance-unleashed-trump-2-0-and-rising-global-economic-risks
- Published: 2025-09-12T17:10:27+07:00
- Author: Angela Reyes

**Trump’s second term signals fiscal dominance, prioritizing government spending
over central bank independence, risking U.S. dollar stability. This trend threatens
global monetary norms, pressuring emerging markets and challenging Thailand’s fiscal
sustainability.**

## Fiscal Dominance and the MAGA Era

As Donald Trump seeks a second term, the global economy faces a surge of economic
nationalism under the “Make America Great Again” (MAGA) banner, driven by fiscal
dominance. This model prioritizes government spending and debt concerns over central
bank independence, evident in Trump’s first term with unfunded tax cuts, rising 
deficits, and Fed pressure. The continuation of these policies threatens the institutional
integrity of monetary policy, shifting away from traditional inflation control and
central bank autonomy.

ADVERTISEMENT

## The U.S. Dollar in a Fiscal Dominance Landscape

Fiscal dominance complicates the U.S. dollar’s future. Rising deficits might attract
foreign capital and strengthen the dollar, but political pressure on the Federal
Reserve to maintain low interest rates risks inflation and eroding purchasing power.
Conversely, rate hikes to control inflation could increase debt servicing costs 
and undermine fiscal sustainability. Either outcome weakens investor confidence,
suggesting a long-term decline in the dollar’s global dominance.

### Related**Posts**

###  󠀁[What Would an ASEAN-Canada Free Trade Agreement Mean for Foreign Investors?](https://www.thailand-business-news.com/asean/331504-what-would-an-asean-canada-free-trade-agreement-mean-for-foreign-investors)󠁿

###  󠀁[Thailand’s Floods Expose Severe Vulnerabilities in Its Automotive Supply Chain](https://www.thailand-business-news.com/business/332669-floods-in-thailand-highlight-the-vulnerability-of-the-countrys-automotive-supply-chain)󠁿

###  󠀁[The Changing Map of Growth: Why East Asia and the RCEP Are More Important Than Ever](https://www.thailand-business-news.com/opinion/328474-the-changing-map-of-growth-why-east-asia-and-the-rcep-are-more-important-than-ever)󠁿

###  󠀁[Thailand Business News — Morning Briefing](https://www.thailand-business-news.com/business/332413-thailand-business-news-morning-briefing-2)󠁿

## Global Implications and Emerging Market Risks

U.S. fiscal dominance risks becoming a global contagion, eroding central bank independence
worldwide and encouraging fiscal accommodation even amid inflation. Emerging markets
like Argentina, Turkey, and El Salvador, already facing fiscal dominance symptoms
such as inflation and currency depreciation, are particularly vulnerable. Thailand,
though not yet afflicted, must strengthen institutional discipline to navigate rising
fiscal pressures and global volatility, safeguarding monetary stability against 
populist temptations.

[Source link ](https://www.scbeic.com/en/detail/product/9907?rand=55232)