(Image source from: PTI)
On Friday, US President Donald Trump issued a stark warning to the BRICS countries, threatening to impose tariffs of 100 percent on their exports should they try to shift away from the US dollar as the leading currency in global trade. Trump has consistently voiced his opposition to the movement toward de-dollarisation, cautioning BRICS nations that they need to preserve the dollar's significance in international commerce to avoid experiencing potential economic repercussions. His recent statement closely mirrors one he made on November 30, shortly after winning the 2024 presidential election. The BRICS group, which includes Brazil, Russia, India, China, and South Africa, has been exploring methods to lessen their dependence on the US dollar for several years. The cooperation among BRICS nations has notably grown, especially after the imposition of Western sanctions on Russia due to its actions in Ukraine. Recently, the group has broadened to welcome Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates. Although BRICS+ doesn't utilize a shared currency, its members have been advocating for the use of their own currencies in trade. During the 15th BRICS Summit in 2023, Russian President Vladimir Putin specifically encouraged de-dollarisation, emphasizing the need for BRICS to increase transactions in their national currencies and to strengthen banking cooperation among themselves.
"The idea that the BRICS Countries are trying to move away from the Dollar, while we stand by and watch, is OVER," Trump wrote. "We are going to require a commitment from these seemingly hostile Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty US Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful US Economy. They can go find another sucker Nation. There is no chance that BRICS will replace the US Dollar in International Trade, or anywhere else, and any Country that tries should say hello to Tariffs, and goodbye to America!", told the official statement of Donald Trump.
The momentum for this initiative continued to build during a meeting of BRICS foreign ministers in Russia in June 2024, where the member states pushed for the use of local currencies in both bilateral and multilateral trading arrangements. Despite these discussions about reducing reliance on the US dollar, it remains the predominant reserve currency globally. Research from the Atlantic Council's GeoEconomics Center conducted last year indicated that neither the euro nor BRICS+ countries have succeeded in diminishing the global dependence on the dollar. Trump's recent threats come as he aims to uphold this dominance. His strategy of leveraging tariffs is not unprecedented. The 78-year-old’s warnings to BRICS+ mirror his recent campaign to impose tariffs on Mexico and Canada, the largest trading partners of the United States. He contends that these tariffs are crucial for addressing issues like illegal immigration and the influx of drugs, notably fentanyl, into the country.
Throughout his campaign, Trump labeled India a "very big abuser" of trade practices and has now adopted a similar stance towards other BRICS+ nations. He argues that raising tariffs on foreign countries could enable him to reduce taxes for American companies and workers, fostering a return of manufacturing to the US. However, this approach has faced skepticism, as economists caution that tariffs might result in increased expenses for American consumers and businesses, particularly those that depend on imported materials.
