"Liberation Day" is barely a fortnight ago and the jolt is taking its place in the annals of modern history. Comparisons have been drawn with Richard Nixon’s abrupt decision in 1971 to end the system of fixed exchange rates that prevailed for a generation. Diplomats and investors were appalled. The dollar's time as the anchor of world commerce was coming to a close — or so a popular narrative has gone.

Nixon's unilateral action was shocking. His team was rightly accused of arrogance and bullying — as U.S. President Donald Trump is now with the punitive tariffs he imposed this month. Then, as in the past two weeks, it was popular to pronounce the upheaval as presaging the demise of dollar dominance. Certainly, American prestige has taken a hit. The dollar is being pushed lower by traders and U.S. Treasuries, a pillar of the postwar financial setup, have been roiled.

And yet, not so fast. The end of Bretton Woods didn't bring the U.S. currency down, though it did have a rough few years. Nor did Japan's rise, the subprime meltdown or other ructions. It’s fine for the dollar to lose ground against the yen-euro or Australian dollar for a while; it's weakened versus every major currency since the end of December. Trump's actions will hurt the American economy: Forecasts of recession have increased since April 2. The critical question is whether the dollar is now set on a course of long-term decline or whether we are witnessing just another healthy FX market correction. The distinction often gets blurred. Remember in early the 2000s when burgeoning current-account and budget deficits were said to herald ruination for the dollar? Those days seem almost quaint.