Coin Press - Trump's attack on the Dollar

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Trump's attack on the Dollar

An unprecedented conflict between the US President and the Federal Reserve is causing unrest on the financial markets. In mid-January 2026, it was announced that the US Department of Justice had issued grand jury subpoenas to the Federal Reserve System. Officially, the investigation concerns allegedly overpriced renovation work on historic administrative buildings, but the chairman of the Federal Reserve, Jerome Powell, stated in a video message that these investigations were being used as a pretext. The threat of punishment was aimed solely at subjugating the Federal Reserve's independent interest rate policy. Powell emphasised that the Federal Reserve fully complies with Congress's statutory oversight rights and called the investigation an unprecedented political interference. He fears that the issue at stake is whether monetary policy is based on data or controlled by political pressure.

Since his return to the White House in January 2025, the US President has repeatedly insulted Powell in a completely questionable manner and urged him to resign. Because the Federal Reserve only lowered interest rates gradually in 2025 and attributed the high inflation largely to the US government's protectionist course, the President increased the pressure. He called the central bank chief a ‘moron’ and a “bonehead” and threatened to sue him for ‘incompetence’. Behind the investigation is the prosecutor he appointed in Washington, who used the renovation costs as a reason to initiate criminal proceedings. According to reports, neither the Attorney General nor her deputy were informed in advance.

Reactions from politicians and experts
The legal offensive sparked sharp criticism across party lines. Several Republican senators made it clear that they would not confirm any nominations to the Federal Reserve Board while the investigation was ongoing. Democratic lawmakers described the move as an attack on the rule of law and a step towards autocracy. They warned that the President wanted to ‘lock up’ the Fed chairman simply because he did not align his interest rate policy with the White House's ideas. Former Fed chairmen and leading economists also warn that this is reminiscent of countries with weak institutions where the government controls the central bank – often with fatal consequences for price stability and the economy. Even market liberals warned that the misuse of criminal prosecution could drive away investors and undermine confidence in the United States.

Internationally, numerous central bankers expressed solidarity with Powell. They pointed out that an independent monetary policy is essential to ensure long-term price stability and a functioning economy. Some observers compared the current developments with authoritarian practices in Turkey or Venezuela, where populist governments attempted to control monetary policy, triggering hyperinflation.

Impact on the financial market
The markets reacted sensitively to the escalation. After the threat of sanctions became known, the US dollar fell significantly against major currencies. The dollar index, which measures the strength of the US currency against a basket of other major currencies, slipped by almost half a percent. The euro rose above 1.16 US dollars, the Swiss franc reached a ten-year high against the US currency, and investors fled to safe havens such as gold and silver. Analysts explained that the threat of losing central bank independence and the prospect of even higher US debt in the future are deterring investors. Gold rose to over $4,600 per troy ounce, and silver prices also reached record highs.

Uncertainty about future interest rate policy caused yields on long-term US government bonds to rise as investors demanded higher risk premiums. At the same time, the stock market initially recorded losses, but technology stocks later supported prices. Some analysts warn that sustained political pressure on the Federal Reserve could lead to higher inflation, capital flight and a depreciation of the dollar. Nomura currency strategists also pointed out that, in addition to geopolitical risks, it is above all the loss of confidence in US monetary policy that is weighing on the dollar.

Possible consequences for the dollar
The president's attacks on the Federal Reserve are not a new phenomenon. Back in 2025, the US currency had already lost significant value following repeated public insults directed at the head of the central bank. Analysts noted that the dollar index posted double-digit losses over the course of the year and that the extreme volatility on the currency markets was linked in particular to attempts to exert political influence on monetary policy. Then, as now, protectionist tariff policies and efforts to force interest rate cuts are driving up inflation. Investors fear that a politically compliant central bank will cut interest rates too sharply, triggering a spiral of inflation.

In addition to domestic political tensions, international factors are also weighing on the US dollar's status as the world's reserve currency. The global community is watching closely to see whether the US will continue to pursue a predictable monetary policy or whether political interests will weaken the reserve currency. If investors withdraw from the dollar on a large scale, alternative reserve currencies such as the euro or the Chinese yuan could gain in importance. Digital central bank currencies could also benefit from this.

Looking ahead ‘for the time being’
Jerome Powell is expected to remain Chairman of the Federal Reserve until the end of his term in May 2026, even though the White House is already sounding out potential successors. If the President appoints a loyal candidate, the Senate could delay the appointment due to ongoing investigations. Some observers believe that Powell – whose term as governor does not end until 2028 – could remain on the board despite the threat of sanctions in order to defend the independence of the central bank.

The coming months will show whether the United States can maintain its traditionally strong central bank independence. The conflict between the president and the Federal Reserve chief is already having a noticeable economic impact and is calling into question confidence in the US dollar as a global reserve currency. Economists warn that an independent monetary policy is a cornerstone of economic stability and must not be sacrificed to day-to-day politics.

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Stargate project, Trump and the AI war...

In a dramatic return to the global political stage, former President Donald J. Trump, as the current 47th President of the United States of America, has unveiled his latest initiative, the so-called ‘Stargate Project,’ in a bid to cement the United States’ dominance in artificial intelligence and outpace China’s meteoric rise in the field. The newly announced programme, cloaked in patriotic rhetoric and ambitious targets, is already stirring intense debate over the future of technological competition between the world’s two largest economies.According to preliminary statements from Trump’s team, the Stargate Project will consolidate the efforts of leading American tech conglomerates, defence contractors, and research universities under a centralised framework. The former president, who has long championed American exceptionalism, claims this approach will provide the United States with a decisive advantage, enabling rapid breakthroughs in cutting-edge AI applications ranging from military strategy to commercial innovation.“America must remain the global leader in technology—no ifs, no buts,” Trump declared at a recent press conference. “China has been trying to surpass us in AI, but with this new project, we will make sure the future remains ours.”Details regarding funding and governance remain scarce, but early indications suggest the initiative will rely heavily on public-private partnerships, tax incentives for research and development, and collaboration with high-profile venture capital firms. Skeptics, however, warn that the endeavour could fan the flames of an increasingly militarised AI race, raising ethical concerns about surveillance, automation of warfare, and data privacy. Critics also question whether the initiative can deliver on its lofty promises, especially in the face of existing economic and geopolitical pressures.Yet for its supporters, the Stargate Project serves as a rallying cry for renewed American leadership and an antidote to worries over China’s technological ascendancy. Proponents argue that accelerating AI research is paramount if the United States wishes to preserve not just military supremacy, but also the economic and cultural influence that has typified its global role for decades.Whether this bold project will succeed—or if it will devolve into a symbolic gesture—remains to be seen. What is certain, however, is that the Stargate Project has already reignited debate about how best to safeguard America’s strategic future and maintain the balance of power in the fast-evolving arena of artificial intelligence.

China’s cartel lifeline

China is not keeping Mexico’s drug cartels alive through a formal alliance, a military pact or an openly declared policy. The reality is more diffuse and, in operational terms, more useful. China-linked chemical suppliers, commercial intermediaries and underground banking networks have become crucial parts of the infrastructure that allows Mexican criminal organisations to manufacture synthetic drugs at scale, move them towards the United States and recycle the proceeds with remarkable speed. The relationship is not a single organisation. It is a market in which every participant solves a problem for somebody else.That distinction matters. There is no publicly demonstrated command structure in which Beijing directs the Sinaloa Cartel or the Cartel de Jalisco Nueva Generación. Nor is every Chinese chemical company, exporter, student, business owner or currency broker involved in crime. Yet the available evidence shows that actors based in China or connected to Chinese commercial and underground banking systems have become indispensable enablers of Mexico’s synthetic-drug economy. They supply ingredients, reduce financial friction and provide the cartels with a global capacity that Mexican organisations could not reproduce as cheaply or efficiently on their own. The phrase saving the cartels is therefore provocative, but not meaningless. It describes an economic function rather than a political alliance.An industrial supply chain, not a secret pactThe modern fentanyl trade is less dependent on farmland than the heroin and cocaine businesses that preceded it. Synthetic drugs can be produced close to their final market, their potency makes transport exceptionally profitable, and their chemistry can be adjusted when a particular substance is banned. That has changed the balance of power inside organised crime. Access to chemicals, expertise, equipment and finance now matters as much as control over fields or remote trafficking corridors. When China placed fentanyl-related substances under class-wide control in 2019, the trade did not disappear. It changed form. Direct exports of finished fentanyl became more difficult, while Mexican organisations expanded their own synthesis using imported precursor and pre-precursor chemicals. The business moved one step upstream into the vast international chemical market, where many compounds have legitimate industrial or pharmaceutical uses and where criminal diversion can be concealed behind intermediaries, false descriptions, altered customs codes and shipments routed through third countries.Mexican brokers and cartel-linked procurement specialists search for suppliers, negotiate prices and arrange delivery through Pacific ports, air cargo, courier services and parcel networks. Some chemicals enter Mexico directly. Others pass through the United States or additional transit jurisdictions before reaching clandestine laboratories. Suppliers can switch to closely related compounds when regulators schedule a specific substance, leaving enforcement agencies trapped in a recurring race between chemical innovation and legal control. Not every company in the chain necessarily knows the ultimate destination or intended use of a shipment. That ambiguity is one reason the system is resilient. At the same time, recent prosecutions have described sellers who allegedly marketed chemicals for narcotics production, discussed concealment methods, accepted digital payments and tailored products to the requirements of traffickers. The supply chain ranges from wilful criminal partnership to negligent compliance and the exploitation of ordinary trade.Once the chemicals arrive, Mexican groups provide the violent and logistical layer. They operate laboratories, recruit chemists, press counterfeit tablets, move bulk powder and use established smuggling networks to cross the US border. The Sinaloa Cartel and CJNG remain the most important organisations in this market, although splinter groups, regional allies and independent brokers increasingly participate. The result is not a simple China-to-Mexico pipeline, but an adaptive commercial web.The financial machine behind the narcotics tradeChemicals are only half of the story. A cartel that cannot move, convert and reinvest its earnings is a cartel that cannot survive. This is where Chinese underground banking and money-laundering networks have become especially valuable. Mexican organisations accumulate enormous quantities of dollars from retail and wholesale drug sales in the United States. Physically moving that cash across the border is expensive and vulnerable to seizure. Conventional bank transfers create records and require explanations. Traditional laundering networks charge substantial fees because they assume serious legal and operational risk.At the same time, many Chinese citizens and businesses seek access to dollars outside China, whether to buy property, pay tuition, acquire luxury goods or move wealth beyond the country’s strict foreign-exchange controls. Most of those customers are not drug traffickers. Their demand for foreign currency nevertheless creates a pool of buyers that professional laundering networks can exploit. The broker matches the two sides. Cartel dollars collected in the United States are delivered to a buyer, deposited through a network of accounts or used to purchase goods. An equivalent amount of renminbi is then paid inside China through a separate domestic transaction. The cartel or its representative receives value in Mexico through pesos, commercial payments, goods, property or accounts controlled by front companies. The money does not need to travel from the United States to China and back through a conventional international transfer. Value moves, while the original currency often remains within the country where it was collected.This is the logic of the mirror transaction. It is fast, difficult to reconstruct and capable of serving two clients at once. The cartel disposes of incriminating cash. The Chinese customer acquires foreign spending power. The broker earns fees and may profit again through trade, exchange-rate spreads or the resale of goods.The laundering can then be layered through electronics, designer products, vehicles, property, casinos, restaurants, import-export companies, cashier’s cheques, peer-to-peer payments, shell businesses, stablecoins and other digital assets. Encrypted messaging allows couriers and brokers to verify cash pickups with serial numbers or photographs while revealing little about the wider network. Trade-based laundering is particularly effective because a legitimate shipment can disguise an illicit transfer of value through false invoices, overpricing, underpricing or transactions between related companies.Between 2020 and 2024, 137,153 suspicious activity reports covered approximately 312 billion dollars in activity potentially linked to Chinese money-laundering networks. That figure must not be mistaken for 312 billion dollars of proven cartel revenue. Suspicious activity reports may overlap, include attempted transfers and capture lawful as well as unlawful transactions. Even with that essential caveat, the scale shows how deeply these networks can touch banks, money-service businesses, property markets, retail commerce and digital payment systems.Recent cases expose the convergenceEvents during 2026 have made the structure increasingly visible. In May, two Chinese nationals were charged with participating in a transnational laundering organisation that allegedly served the Sinaloa Cartel and CJNG. The alleged methods included mirror transfers, foreign bank accounts, encrypted communications, serial-number verification and trade-based laundering across the United States, Mexico, Latin America and China. In another case announced in March, six Chinese nationals and two pharmaceutical companies were charged in conspiracies involving chemical agents used to manufacture or adulterate fentanyl. Three defendants were also accused of attempting to provide material support to a person they believed represented the Gulf Cartel. The allegations illustrated how chemical sales, payment processing and cartel logistics can merge within the same commercial relationship.In June, a Honduras-based Chinese national pleaded guilty to drug trafficking, laundering and providing support to CJNG. The network had coordinated the laundering of more than 22 million dollars in proceeds from cocaine and fentanyl sales and used cryptocurrency, trade-based methods and encrypted communications. It had also participated in moving more than 450 kilograms of cocaine. Each case has its own legal facts, and charges remain allegations until proven. Taken together, however, the cases reveal a mature service economy. Cartels are no longer merely buying chemicals from distant factories and hiring unrelated launderers afterwards. They can draw on overlapping networks that arrange procurement, transport, payment, currency conversion, concealment and reinvestment.That integration reduces costs and makes disruption harder. Arresting a cartel lieutenant may remove one customer, but it does not eliminate the broker. Seizing one chemical shipment may delay a laboratory, but it does not destroy the supplier network. Closing one account often causes the money to migrate to another bank, another trade corridor or another digital asset.Beijing’s responsibility is real, but it is not simpleThe evidence does not justify treating every China-linked actor as an agent of the Chinese state. It does, however, raise serious questions about enforcement, regulatory incentives and the degree of political priority assigned to the problem. China possesses one of the world’s largest chemical and pharmaceutical manufacturing sectors. Its scale is a legitimate economic strength, but it also creates an enormous monitoring challenge. Small producers, trading companies, online sellers and freight intermediaries can be difficult to supervise, especially when the products are dual-use chemicals rather than finished narcotics. Criminal vendors can change company names, websites, payment channels and export descriptions faster than traditional investigations can proceed.Beijing has taken meaningful steps. It placed fentanyl-related substances under broad control, has prosecuted selected offenders and has participated in limited joint operations. In May 2026, China added three more chemicals to its controlled precursor list for exports to the United States, Canada and Mexico, while warning businesses about eight additional substances that could be used to manufacture synthetic drugs. A joint Chinese and US investigation also led to five arrests and drug seizures. Those actions demonstrate that cooperation is possible. They also expose the central weakness of molecule-by-molecule regulation. Once one chemical is controlled, traffickers can turn to a pre-precursor, a substitute compound or a different synthesis route. Effective enforcement therefore requires regulation of chemical families, rigorous customer verification, scrutiny of suspicious export patterns and rapid exchange of intelligence with destination countries.China argues that the fentanyl crisis is fundamentally an American problem driven by domestic demand and that Washington uses the issue as a geopolitical weapon. The first part contains an important truth. Without a vast consumer market in the United States, there would be no comparable revenue stream for the cartels. Yet demand does not absolve suppliers, brokers or governments from acting against criminal diversion. The crisis is simultaneously American in consumption, Mexican in large-scale production and transnational in chemistry and finance.Mexico is the manufacturing hub and the battlefieldMexico is not a passive victim of a foreign scheme. Its cartels choose to buy the chemicals, operate the laboratories, corrupt officials, intimidate communities and smuggle the finished drugs. They have converted geographic proximity to the United States into a decisive commercial advantage and have used decades of experience in cocaine, heroin and methamphetamine trafficking to build a synthetic-drug industry of global reach.The Mexican government has intensified seizures, laboratory raids, border deployments and transfers of major cartel figures to US custody. These actions have disrupted individual organisations and demonstrated a greater willingness to confront high-value targets. Yet the underlying business model has proved highly adaptable. Leadership losses can trigger fragmentation, succession wars and temporary chaos without eliminating the market for drugs, laundering or protection. Ports remain a critical vulnerability. The volume of legitimate trade makes comprehensive inspection impossible, while corruption, intimidation and falsified documentation can help suspicious cargo pass through. Local police forces and prosecutors often face far greater resources and firepower on the criminal side. National institutions may conduct spectacular operations, but sustained control requires reliable customs systems, protected investigators, independent courts and a financial intelligence structure capable of following money through legitimate businesses.Mexico’s insistence on sovereignty is understandable, especially when US officials speak of unilateral action. But sovereignty cannot become a shield against verifiable evidence or a substitute for institutional reform. Equally, Washington cannot treat Mexico merely as a source of danger while ignoring the American market that generates the profit and the financial channels through which much of that profit circulates.Why the cartels are being savedChina-linked networks save Mexican cartels in three practical ways. First, they preserve production by supplying an evolving menu of chemicals and equipment when specific substances are banned. Secondly, they make laundering cheaper and safer by matching drug dollars with demand for foreign currency and goods among Chinese customers. Thirdly, they internationalise cartel finance, allowing proceeds to be converted into property, trade, digital assets and legitimate-looking business revenue across several jurisdictions.The word saving should not be confused with charity or ideology. These are commercial relationships. Chemical suppliers want sales. Money brokers want fees. Chinese clients want access to overseas currency. Mexican cartels want inputs and clean value. Each party can participate without understanding the entire structure, and that fragmentation protects the system from collapse. Yet the phrase can also mislead. China is not the sole cause of cartel power. Mexico’s corruption and impunity, US drug demand, weaknesses in global trade controls, gaps in financial supervision and the extraordinary profitability of synthetic narcotics all sustain the same market. Removing one Chinese supplier would not end it. Reducing the availability of China-linked chemicals and laundering services across the system would, however, make cartel operations slower, more expensive and more vulnerable.What could actually break the chainA serious strategy must target the network rather than its nationality. Chemical producers should be required to verify customers, end users and unusual shipping routes. Export controls should cover families of dangerous compounds and be updated rapidly as synthesis methods change. Online platforms should be compelled to remove sellers that advertise concealment or narcotics applications. Ports need risk-based screening built on trade data, beneficial ownership records and intelligence about brokers, not merely random container searches.Financial enforcement must look beyond large international transfers. The most revealing signals may be repeated cash deposits, unexplained purchases of electronics, rapid credit-card repayments, property acquired through third parties, companies trading far beyond their apparent capacity and stablecoin flows that do not fit a customer’s profile. Banks, payment companies, casinos, estate agents, customs services and digital-asset platforms need to see themselves as parts of the same defensive system. Targeted sanctions and prosecutions can isolate the brokers who connect otherwise separate criminal markets. They are likely to be more effective than broad tariffs, which punish legitimate trade and can be absorbed or circumvented without identifying a single illicit shipment. Mutual legal assistance between China, Mexico and the United States must become faster, more routine and less dependent on the wider political climate.Enforcement alone will not resolve the crisis. The United States must continue reducing overdose deaths through treatment, prevention, naloxone access and a credible strategy for lowering demand. Mexico must strengthen institutions that protect ports, courts and local government from criminal capture. China must police chemical exporters and underground banking with the same seriousness it applies to threats it regards as central to domestic stability.The deepest danger is the belief that the fentanyl economy is a straight line from a Chinese factory to a Mexican laboratory and then across the US border. It is a web of legal commerce, criminal brokerage, digital finance, corrupt facilitation and consumer demand. That is why it survives arrests, sanctions and record seizures. China is not single-handedly keeping Mexico’s cartels alive. But China-linked chemical and financial networks have become one of the principal systems that allow them to adapt, recover and expand. Breaking that relationship would not end organised crime. It would remove one of its most efficient engines.