'Ominous': Trump threatens to turn US into 'investment pariah'

President Donald Trump reacts during a meeting with Canadian Prime Minister Mark Carney (not pictured) in the Oval Office at the White House in Washington, D.C., May 6, 2025. REUTERS/Leah Millis

Under President Donald Trump, "cracks in U.S. economic dominance are starting to show," according to a New York Times report, with other global economic players looking to get some distance from the country's increasing instability.

"Global investors are balking at U.S. bonds. Talk of the dollar’s dwindling power is getting louder. Foreign governments are hauling their gold out of American vaults," Alan Rappeport, a Washington correspondent for the Times, wrote on Wednesday. "Almost two years into President Trump’s second term, the world economy is increasingly looking for ways to distance itself from America. Concerns about a $40 trillion debt burden, the excessive use of sanctions to solve foreign policy problems and Mr. Trump’s penchant for pushing the limits of the rule of law are raising questions about the appeal of the United States as a haven for global investment."

The U.S., he explained further, is not yet a complete "investment pariah," as "private investors are still pouring money into American financial markets and stocks, artificial intelligence infrastructure is booming and no rival currency is poised to topple the dollar imminently." "Cracks" in that healthy facade are becoming unavoidable, however.

"The most glaring example has been in the bond market," Rappeport continued. "Yields have been soaring as investors nervous about the mounting national debt demand a higher rate of return for buying Treasury bonds. This week, the yield on the 10-year Treasury topped 5 percent, reaching its highest level since 2007. A decision to raise rates on Wednesday could help to alleviate concerns about the Fed’s grip on elevated inflation, fears that have injected more jitters into bond markets."

Rappeport noted that amid this unavoidable reality, many foreign nations have pledged to invest in the U.S., but this has more often than not been a ploy to "curry favor with the White House." Beyond their talk, sources of global capital are "starting to seek alternative destinations."

“Geopolitical factors and U.S. weaponization of the dollar through financial sanctions are causing central banks and other official investors to attempt to diversify away from dollar assets,” Eswar Prasad, former head of the International Monetary Fund’s China division, explained to the Times.

Norway recently announced a plan to diversify its sovereign wealth away from a reliance on U.S. Treasuries, and they are far from alone in making that sort of decision.

Additionally, the declining status of the U.S. dollar, a worldwide standard still used in 90 percent of "global foreign exchange transactions," also points to a grim economic future for America. Since 2015, the portion of dollars in central bank reserves has declined by 8 percent, down from 64 percent to 56 percent by the end of 2025.

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