If They Abandon The U.S. Dollar
In a significant action that could alter international economic relationships, President Donald Trump has once again reiterated his warning to impose 100% tariffs on BRICS countries if they attempt to replace the U.S. dollar as a reserve currency. This action highlights the persistent geopolitical strains and the essential role of the U.S. dollar in the global economy.
Trump’s Tariff Warning
On January 30, 2025, President Trump warned BRICS nations about substituting the U.S. dollar with another reserve currency. He emphasized the 100% tariff warning, stating, “We are going to demand assurance from these seemingly unfriendly nations that they will not create a new BRICS currency, nor support any other currency to supplant the powerful U.S. dollar; otherwise, they will face 100% tariffs .” This assertion, nearly identical to one he made on November 30, 2024, underscores the administration’s commitment to preserving the dollar’s supremacy in global trade.
BRICS and the U.S. Dollar
The BRICS coalition- comprising Brazil, Russia, India, China, and South Africa, along with nations such as Egypt, Ethiopia, Iran, and the United Arab Emirates-has been considering the option of reducing dependence on the U.S. dollar. These discussions have gained momentum, particularly following the sanctions the West imposed on Russia due to the war in Ukraine, which resulted in the freezing of Russia’s dollar and euro reserves. However, the bloc currently lacks a unified currency.
Global Economic Impact
Impact on Global Trade: The potential shift away from the US dollar by BRICS nations could have significant implications for global trade. Nations such as Russia and China are progressively engaging in trade using their domestic currencies or other alternatives like the renminbi.
. This trend is particularly evident in energy transactions, where Russian oil is being sold in currencies other than the dollar. The BRICS+ bloc is also focusing on enhancing intra-group trade, which has risen from 22% to 28% of their total trade turnover since 2008.
Impact on the US Economy: A significant decline in global demand for the dollar could undermine its status as the world’s primary reserve currency, leading to increased volatility for the US economy. The US has historically used its currency’s dominance as a tool for economic sanctions and geopolitical leverage. As countries seek alternatives to the dollar, this power dynamic may shift, potentially leading to reduced US influence on global economic policies.
Responses from BRICS Nations
Russia
Russia has been at the forefront of discussions regarding de-dollarization. Following Trump’s threat, the Kremlin reiterated that American pressure would only accelerate the global trend toward using national currencies in trade, diminishing the dollar’s role as a reserve currency. Russian President Vladimir Putin has emphasized the need for alternative financial systems to circumvent Western financial infrastructure.
China
Beijing responded to Trump’s threat by promising to continue expanding cooperation among fellow BRICS members. Foreign Ministry spokesman Lin Jian emphasized that BRICS aims to achieve comprehensive development and prosperity, not to engage in “bloc confrontation” or “target any third party”.
India
India has stated that it has “no interest” in weakening the dollar. Indian Foreign Minister Subrahmanyam Jaishankar clarified, “India has never been for de-dollarization”. However, the country continues to explore bilateral financial transactions within the BRICS framework.
South Africa
South Africa also rejected the notion that the bloc intended to establish a new currency. However, the country remains engaged in discussions about enhancing intra-group trade and financial cooperation.
“Brazil and other BRICS nations not yet given any Response.”
Conclusion
President Trump’s threat to impose 100% tariffs on BRICS nations underscores the critical role of the US dollar in the global economy and the administration’s determination to maintain its dominance. While BRICS nations have shown interest in reducing their reliance on the dollar, they face significant obstacles, including political cohesion, economic disparities, and external geopolitical dynamics. The outcome of this geopolitical standoff will have far-reaching implications for global trade and economic stability.
Fact Check By: Jhon Mathew Contact