US dollars can only be held in proper by US entities. All US dollars are either actually held by a bank, which has a US entity responsible for those US dollars, or as an IOU for another US entity. Despite them being on the balance sheet of a non-US entity, they are ultimately in custody of some entity under US law, unless we're talking about literal cash.
> Countries don't ask for US dollars in order to trade. Although it is common for some goods to be priced in US dollars, companies (rather than countries) will price and trade in whatever currency suits them, often with assistance from banks providing foreign exchange services. The banks don't need to be US banks, and goods priced in USD do not need to be paid for in USD if you go through an intermediary, which is common practice.
Countries do ask for US dollars in order to trade. You can notionally trade in another currency, but the value of this currency is related to the number of US dollars it can buy, and eventually that is what ends up happening. Some countries will set up currency swap mechanisms in order to allow for trade without relying on the dollar, but these are few and far between. It is generally not possible to do such trade without at some level going through the US dollar. This is a natural consequences of the fact that the US dollar is the only dominant reserve currency, meaning that it is by far the currency with the largest trade surplus. The structural reasons for this trade surplus, which I won't get into, are the reason why international trade ends up with the US dollar. For these reasons, the threat if being banned from using the US dollar, if your assets aren't seized, is sufficient to greatly dissuade trade.
Cuba is not the only example of this. American secondary sanctions on Iran led to the cancellation of contracts between European companies and Iranian companies en masse, and were cited as the reason why it happened.
> The parent comment stands up. The embargo is not a reasonable explanation for the poor circumstances of the Cubans.
Cuba has a GDP per capita of 9500$ USD nominal (https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location...) - which is above the average for Latin America and the Cardibbean. We can look at Iran for an example of a country under an identical sanctions regime, which suffered a 50% fall in GDP. The thesis that most of its economic problems come from the sanctions regime seems strong, as the closest analog suffered a halving of GDP and because it is nonetheless economically a strong performer for the region.
If you look at a microscopic level, the lack of access to specific products is a common theme in Cuban economic problems, and this is certainly attributable to the sanctions regime.