In a world where living standards and economic wellbeing decide the fate of political systems, the US dollar remains the most potent weapon in Washington’s geopolitical arsenal. Yet premature announcements of de-dollarisation abound. This week, the FT proclaimed that “’Trump trades’ start to misfire as dollar weakens.” It is true that the dollar has dipped recently, but is it fair to characterise the new administration’s policies as misfiring?

There are many reasons why China, Russia and the rest of the Brics-adjacent countries would want to get rid of — or at least weaken — the overly powerful dollar. However, the currency is still so potent that the Treasury Department must fine-tune it to avoid harming allies instead of enemies. In the world of commodities the bulk of trading is done in dollars, meaning most countries have to exchange their currencies for USD if they want to buy something on the world markets. The stronger the dollar gets, the more expensive commodities become for other nations, potentially threatening the health of their economies. This is fine for enemies, but not for allies.

There is an odd tendency to see every downturn of the dollar as something negative, as per the FT headline and countless others. The dollar has decreased by 0.2% this year; investors are understandably wary of Trump’s trade war and its potential consequences. While this might seem significant, it’s noteworthy that from September to November last year the dollar increased by 7.3% compared to many other currencies. A slight devaluation of the dollar is not a “misfiring” of economic policy — ups and downs are regular occurrences and part of the fine-tuning process.

While having a strong currency sounds desirable, having too strong a currency is not — and Washington has no interest in overusing the dollar as a “wrecking ball” for other economies. As with oil prices, there is a hypothetical sweet spot which works for everyone. In the case of oil, the sweet spot is when prices are low enough for industry and companies to perceive it as cheap, but high enough for it to be profitable to produce so that oil and gas companies keep drilling. A similar approach is applied when it comes to the dollar.

The strength of the dollar is often measured via the US Dollar Index (DXY), which describes its value relative to other currencies. The DXY is currently just shy of 108, and according to experts such as Brent Johnson the problematic area for other economies — where the dollar is too strong — would be 115. A look at the MarketWatch chart reveals that since the late Eighties the United States has tried to keep the dollar hovering around that value. Currency management is not an exact science, but the US Treasury’s intention is quite clear: remain the dominant currency and distribute economic pain across domestic and international markets.

None of this is to say that the dollar is immortal. All global currencies decline at some point, and so will the dollar. But inevitable does not mean imminent.

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Ralph Schoellhammer is assistant professor of International Relations at Webster University, Vienna.

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China is trying to catch up with America on artificial intelligence. The Wall Street Journal has reported that Zhipu AI — one of China’s six “AI tiger” LLMs — has released a new model that can rival leading US systems, including Anthropic’s Mythos, in cybersecurity tasks such as pinpointing security bugs. While this marks a milestone in China’s drive to catch up with Western AI capabilities, strong performance on a single benchmark does not mean it has taken the lead. Chinese models still lag behind their Western counterparts in broader capabilities, such as autonomous operation. Skepticism is therefore warranted before resorting to hysterical conclusions, but complacency about the geopolitical implications of China’s AI advances would be an even greater mistake.

On the infrastructure side, Chinese AI is still constrained by access to advanced chips, with American labs way ahead in computing capacity as well as investment. Analysis from earlier this year suggests that Chinese models are likely to be at least a few months behind those in the US. But they are still continuing to make progress, or that the geopolitical importance of AI will be decided only by whose LLM has ventured deeper into the technological frontier. The practical applications of AI, countries’ to capture foreign markets, and the application of AI into the real economy will matter just as much.

Here, China may hold an advantage. As with its dominance across many critical supply chains, Beijing may not need to produce the most advanced AI systems — only those that are affordable and widely deployable. In doing so, it could consolidate global influence by supplying functional, low-cost AI at scale.

Beijing seems to be pursuing exactly that path, developing an AI “open-source” strategy that offers affordable, widely available AI models for companies and individuals to use and modify as they wish. The production of the DeepSeek AI model, which matched the performance of Silicon Valley tools such as ChatGPT at a fraction of the cost for users, created goodwill among Chinese models with developers.

The four most popular models on OpenRouter, an AI hardware platform for developers, are now all Chinese. The goal for China is not only to win the frontier-model race, but to make its systems the default layer of AI adoption across industries and global markets. For most economies, the choice is increasingly between an affordable tool they can deploy now and a more robust one that may be out of reach.

And while the countries adopting Chinese models may be exposed to political pressure and cyber threats from Beijing, safer and more capable alternatives matter little if they are unaffordable. American AI companies are already under pressure to monetize products whose operating costs are rising. If Chinese open-source models become the cheap default for startups, universities, governments and businesses across the developing world, then America’s AI lead will be eroded from below.

Perhaps more concerning for America in the long run is how AI can give Chinese manufacturing even more strength, through the ongoing integration of AI as a general-purpose technology. China’s new Five-Year Plan mentioned AI more than 50 times and includes an “AI+” action plan aimed at spreading AI across the economy.

Beijing has been pioneering automation of its critical infrastructure for years, with promising recent results in increasing warplane production capacity. In that regard, China’s open-model strategy and manufacturing dominance will reinforce each other. Cheap, adaptable models accelerate deployment across the real economy while those deployments generate real-world data and use cases that can feed back into further model improvement.

The United States should not dismiss the importance of its lead in the AI race. That lead worries Beijing, not least because a more automated Chinese economy would also become more vulnerable to AI-generated cyber threats. But nor should Washington assume that China cannot catch up with American capabilities over time.

This AI competition represents part of a broader struggle over tech supply chains and geopolitical influence. Decisions over whether to adopt US or Chinese models could produce a more fragmented global reality, with different regions relying on different cloud providers, chips and security structures. The result will likely be a global economy which is divided into competing spheres, rather than one which produces a single winner.

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Miquel Vila is a political and geopolitical risk consultant focusing on industrial strategy, critical infrastructure and global supply chains.

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