On Saturday, Trump posted a statement on his social media platform, Truth Social, addressing the bloc’s continuous efforts to challenge the dollar’s dominance.
Early on Sunday, Donald Trump wrote in a social media post, “The notion that the BRICS countries are attempting to distance themselves from the dollar as we merely observe is OVER.”
Preparing to counter any threat to the dollar’s supremacy in global trade, U.S. President-elect Donald Trump has warned the BRICS group—comprising India, Russia, and China among its key members—with “100 percent tariffs” if they pursue creating a new currency or support any alternative as the world’s reserve.
In an early Sunday social media post, Trump stated, “The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is OVER.”
“We demand a commitment from these countries not to create a new BRICS currency or endorse any other currency to replace the mighty U.S. dollar. If they do, they will face 100 percent tariffs and can say goodbye to accessing the wonderful U.S. economy. They can go find another ‘sucker!’ There is no chance that the BRICS will replace the U.S. dollar in international trade, and any country that attempts it should wave goodbye to America,” Trump wrote.
With the U.S. dollar accounting for over 90 percent of global transactions, Trump’s recent comments come amid differing opinions at the BRICS summit in October. At that event, Russian President Vladimir Putin cautioned that the “dollar is being used as a weapon,” while Prime Minister Narendra Modi warned that the group should avoid the perception of trying to replace global institutions. Trump’s threat also coincides with U.S. sanctions on Russia leading to the diversion of Russian oil from Europe to Asia.
Nevertheless, international trade experts caution that such a tariff move by the U.S. would “ultimately hurt America the most.” They point out that several countries have been exploring alternative “mechanisms” since the U.S. “weaponized the global financial infrastructure” by excluding Iran and Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which is crucial for international transactions.
“It is the actions of the United States that have driven many countries to explore alternatives to the US dollar. The US has historically used its influence over global financial systems, like the SWIFT network, to enforce unilateral sanctions,” noted Ajay Srivastava, a former trade officer and head of the think tank Global Trade Research Initiative. “By blocking countries such as Russia and Iran from accessing SWIFT, the US has effectively weaponized the global financial infrastructure, prompting other nations to seek alternative payment mechanisms for legitimate trade.”
Srivastava also warned that imposing a 100 percent tariff on BRICS countries could have negative economic repercussions. “Imports into the US would likely shift to third countries, potentially raising costs for American consumers without restoring manufacturing jobs domestically. The US has become less competitive in producing labor-intensive goods due to higher production costs, and tariffs are unlikely to reverse this trend,” he explained.
BRICS, originally comprising Brazil, Russia, India, China, and South Africa, welcomed four new members this year—Egypt, Ethiopia, Iran, and the UAE—and now accounts for nearly half of the world’s population and almost a quarter of its economy.
Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisations (FIEO), suggested that India should engage diplomatically with the US to clarify its stance, emphasizing that diversifying trade mechanisms is not anti-American but rather a move towards multipolarity and financial stability.
“We should expedite the development and internationalization of digital currency (CBDC) and platforms like UPI to assume a leadership role in BRICS currency initiatives. Trump’s threats might heighten geopolitical tensions but are unlikely to dissuade BRICS nations from exploring alternatives to the US dollar. For India, the optimal path is a balanced strategy: endorsing financial reforms within BRICS that align with its interests while maintaining robust ties with the US to protect its broader strategic and economic priorities,” Sahai stated.
Meanwhile, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER), there has been a gradual decline in the dollar’s share of central bank and government foreign reserves. However, over the past two decades, the reduced dominance of the US dollar has not been matched by corresponding increases in the shares of the other “big four” currencies—the euro, yen, and pound, according to the IMF.
“In fact, this shift has been accompanied by an increase in the share of what we call non-traditional reserve currencies, such as the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies,” the IMF reported in July.
Notably, the IMF also highlighted that one non-traditional reserve currency gaining market share is the Chinese renminbi, whose growth accounts for a quarter of the decline in the dollar’s share. “The Chinese government has been promoting renminbi internationalization through various measures, including developing a cross-border payment system, extending swap lines, and piloting a central bank digital currency. However, it is notable that renminbi internationalization, at least in terms of the currency’s reserve share, appears to be stalling,” the IMF noted regarding this key BRICS member.
“China is eager to take on a leading role to leverage the BRICS bloc against the US, though India, Brazil, and South Africa are more inclined to collaborate with the US and resolve differences amicably through negotiations,” stated FIEO chief Ajay Sahai.
In India, efforts to reduce reliance on the US dollar and internationalize the rupee led the Reserve Bank of India to permit invoicing and payments for global trade in rupees in 2022, following sanctions imposed on Russia amid the Ukraine conflict.
According to the BIS Triennial Central Bank Survey 2022, the US dollar accounted for 88 percent of global foreign exchange market turnover in daily averages, while the rupee accounted for only 1.6 percent. The survey indicated that if rupee turnover increases to match the 4 percent share of non-US, non-Euro currencies in global forex turnover, it would be considered an international currency.
However, India’s trade with Russia in domestic currency remains limited due to Indian banks’ concerns over US sanctions and an imbalanced trade relationship between the two countries. Although India-Russia trade has surged significantly since the Ukraine war, it remains heavily skewed in Russia’s favor.
Official data shows that India’s exports to Russia were valued at $4.2 billion in FY24, while increasing oil imports from Moscow have expanded the import bill to $61 billion. Consequently, Russia has accumulated a substantial amount of rupee reserves, which it has been unable to use for settling bilateral trade in domestic currency and is instead investing in Indian stocks and bonds.
In October, External Affairs Minister S. Jaishankar stated that although India is advancing its trade interests, avoiding the use of the US dollar is not part of its economic strategy. He noted that US policies often complicate trade with certain countries, and India is exploring “workarounds” without seeking to move away from using the dollar, unlike some other nations.
However, the Union Minister did add that a multipolar world will eventually be reflected in “currencies and economic dealings”.
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