WASHINGTON (Reuters) -The massive tariffs proposed by President Donald Trump on "Liberation Day" in April put the U.S. dollar's role as the world's anchor currency at risk, while the administration's eventual climbdown to more modest rates has likely left it secure, new economic research has concluded. The research found that the country's "exorbitant privilege," with the dollar's role as a risk-free asset drawing investment to the U.S. and allowing the country to borrow at lower rates, is tightly bound to open trade that couples the fate of other economies to what happens in the U.S. Protectionism would weaken that connection and the benefits that go with it, with a tariff rate of 26% estimated as a tipping point that would allow competing currencies like the euro to become more central to the global economy, authors including Boston University economics professor Tarek Hassan, San Francisco Fed vice president Thomas Mertens, and Jingye Wang of the Renmin University of China, concluded from their research.
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