President Donald Trump has reignited tensions with the BRICS bloc, warning that the United States would impose a 100% tariff on imports from BRICS member states if they continue pursuing plans to create a reserve currency to rival the US dollar.
The renewed threat, published Thursday on Trump’s Truth Social platform, follows a similar statement made shortly after his victory in the 2024 presidential election. Trump stated unequivocally that there was “no chance” BRICS could dethrone the US dollar in international trade, adding, “Any country that tries should say hello to tariffs, and goodbye to America!”
BRICS’ Efforts to Reduce Dollar Dominance
BRICS, an economic bloc named after its founding members Brazil, Russia, India, China, and South Africa, expanded in 2024 to include Iran, Egypt, Ethiopia, and the United Arab Emirates. These nations represent some of the world’s fastest-growing economies and have collectively sought ways to reduce their dependence on the US dollar.
The bloc’s discussions about a common currency intensified after the US and European Union imposed sanctions on Russia following its full-scale invasion of Ukraine in 2022. Concerns grew that other BRICS nations could face similar punitive measures if their policies clashed with Western interests.
This push to develop a new currency has been perceived by many as a challenge to America’s global financial dominance. Economists generally agree that the dollar-based financial system offers the United States key economic advantages, including lower borrowing costs, increased fiscal flexibility, and geopolitical influence.
The US dollar remains the world’s dominant reserve currency, facilitating roughly 80% of global trade and serving as the standard for pricing essential commodities like oil and gold.
BRICS nations have accused Washington of “weaponizing” the dollar to advance its geopolitical interests. By controlling the global financial system, the US has the ability to impose crippling sanctions on rivals, limiting their access to international trade and capital.
Russian President Vladimir Putin, a vocal proponent of reducing dollar reliance, has been a key driver of BRICS’ currency discussions. During a BRICS summit in Kasan in October 2024, he proposed a blockchain-based international payments system designed to bypass Western sanctions.
Although there was limited enthusiasm for Putin’s digital currency idea, BRICS leaders did agree to increase trade in local currencies, reducing their exposure to dollar-related risks.
BRICS Currency
The idea of a shared BRICS currency faces numerous challenges, primarily due to the political and economic diversity of its members.
China, an authoritarian state with a GDP of $17.8 trillion, contributes approximately 70% of BRICS’ total economic output. Beijing has consistently maintained a trade surplus and holds vast dollar reserves to support its role as a leading exporter.
India, on the other hand, is a democracy with a $3.7 trillion economy and runs a trade deficit. Its cautious approach to the currency proposal underscores concerns that China’s dominance within BRICS could overshadow India’s national interests.
Disparities in economic development and growth rates among the bloc’s members further complicate the feasibility of a unified currency. The varied political systems and monetary policies of BRICS nations pose significant obstacles to reaching a consensus.
A look at the history of the euro highlights the complexity of launching a shared currency. The idea for the euro was first proposed in 1959, but it took over four decades before euro banknotes and coins were introduced in 2002.
Experts suggest that BRICS may explore a more limited approach, such as a joint trade currency pegged to a basket of national currencies or commodities like gold or oil. This model could resemble the International Monetary Fund’s Special Drawing Rights (SDR), which is valued based on a mix of major global currencies.
Some advocates have also floated the idea of a digital currency for BRICS trade settlements.
Trump’s Staunch Opposition
President Trump remains adamant that any BRICS effort to undermine the dollar’s dominance must be met with strong economic retaliation.
He reiterated on Truth Social his desire for a “commitment” from BRICS countries to “neither create a new BRICS currency nor back any other currency to replace the mighty US dollar.”
Despite his combative rhetoric, experts argue that Trump’s fears may be premature, as the BRICS currency proposal has made little tangible progress.
South Africa’s government dismissed rumors of an imminent BRICS currency in December, attributing the speculation to “recent misreporting.” South African foreign ministry spokesperson Chrispin Phiri stated that current discussions have focused solely on enhancing trade using national currencies.
However, Russian government spokesman Dmitry Peskov countered by asserting that the trend toward de-dollarization was accelerating, with more countries opting to use local currencies in trade and international economic transactions.
Tariffs
Trump’s renewed tariff threat risks straining diplomatic ties with some of the world’s fastest-growing economies, many of which are key trading partners for the United States.
BRICS nations represent a significant portion of global trade and have rapidly expanding consumer markets. Economists warn that imposing 100% tariffs on imports from these countries could trigger retaliatory measures, disrupting supply chains and further fueling inflation both globally and domestically.
The potential tariffs could also have a chilling effect on American businesses that rely on imports from BRICS nations. From electronics to raw materials, countless industries would face rising costs, which could be passed on to consumers.
The global economy is already grappling with uncertainty stemming from geopolitical tensions, supply chain disruptions, and inflationary pressures.
Trump’s protectionist stance could exacerbate these challenges, dampening economic growth and destabilizing international trade networks.
Observers note that while Trump’s rhetoric resonates with his political base, pragmatic diplomacy may be necessary to navigate the complex dynamics surrounding BRICS’ currency ambitions.
For now, the possibility of a BRICS currency remains theoretical, but the bloc’s determination to reduce its reliance on the dollar underscores a shifting landscape in global finance.
Whether Trump’s threats will deter BRICS nations or embolden their efforts to establish an alternative financial system remains to be seen. However, one thing is clear: the battle for global currency supremacy is far from over.
