Trump threatens 100% tariff on BRICS nations over currency plans
What's the story
United States President-elect Donald Trump has sent a strong warning to the BRICS nations, threatening them with a 100% tariff if they back or establish a new currency to supplant the "mighty" US dollar in global trade. The BRICS group includes Brazil, Russia, India, China, and South Africa, with new entrants like Iran and the United Arab Emirates (UAE).
Commitment call
Trump demands commitment from BRICS nations
"We require a commitment from these countries that they will neither create a new BRICS Currency, nor back any other currency to replace the mighty US Dollar," Trump wrote on Truth Social, his own social media platform. He also warned that non-compliance could result in these nations losing access to the US economy. Trump reiterated his belief that there is "no chance that the BRICS will replace the US Dollar in International Trade," saying, "They can go find another 'sucker'."
Currency alternatives
BRICS nations explore alternatives to US dollar
BRICS has been looking for alternatives to lessen their dependence on the dollar. At a recent summit in Kazan, Russia, the bloc discussed boosting non-dollar transactions. Vladimir Putin accused the US of "weaponizing" the dollar but clarified there are no current plans for a unified BRICS currency. Russia advocated for the development of a new payment system that would provide an alternative to SWIFT, the global bank messaging network, and allow Moscow to avoid Western sanctions while trading with partners.
India's position
India's stance on de-dollarization and US dollar
India has not actively targeted the dollar but External Affairs Minister S Jaishankar admitted that at times India has expressed interest in alternative currency. However, he did note challenges when trade partners don't have dollars. "We spoke about rebalancing...obviously all of this is also going to reflect on currencies and economic needs," Jaishankar said, underscoring India's pragmatic approach toward global economic shifts.
Dollar dominance
US dollar remains dominant global reserve currency
A research study by the Atlantic Council shows that the US dollar still remains the world's top reserve currency. It makes up for about 58% of global foreign exchange reserves and dominates commodity trading such as oil. The dollar's position, however, is threatened by BRICS' expanding GDP share and the alliance's intention to trade in non-dollar currencies, a process known as de-dollarization.