In a year marked by a U.S.-sparked tariff roller coaster, trade war murmurings and market fluctuations, much of the world is joining economist Ryan Chahrour in thinking about questions that have been on his mind for years: How do people’s beliefs drive economic events? And what makes the U.S. dollar special – and dominant – in world trade? 

“It’s a moment of nervousness,” said Chahrour, the Ernest S. Liu Professor of Economics and International Studies in the College of Arts & Sciences. “Right now, it’s mostly about expectations. Current tariffs on China matter, but it’s the expectations of what’s coming six months down the road that’s really driving things and having a chilling effect.”

While Chahrour could not have predicted the volatile policies and market dynamics of spring 2025, he has been studying related scenarios. In a 2024 paper, he explored what it would take to dethrone the U.S. dollar as the dominant currency. Current events have not conspired to do quite that, but scenarios he once thought beyond possibility have come within range. And in a National Bureau of Economic Research (NBER) working paper, he is examining how economic news feeds into exchange rates, revealing that “the period of anticipation of some change can be very different from the period when the change actually happens.” 

“Ryan is one of the first scholars to recognize the relationship between trade and the cost of financing government debt,” said Seth Sanders, the Ronald G. Ehrenberg Professor of Economics and Donald C. Opatrny ’74 Chair of Economics. “He has studied it extensively, including whether the U.S. can maintain its dominance as the medium of exchange or whether the yuan will emerge as a second currency with different spheres of influence,” Sanders said. “His conclusion is that this depends largely on trade policy.”

Read the full story on the College of Arts and Sciences website.