US President Donald Trump has repeated a threat to impose stringent tariffs on BRICS countries for attempts to replace the US dollar in international trade.
- BRICS is named for the founding countries-Brazil, Russia, India, China, and South Africa, and now includes six more countries and ten partner countries.
- Although still an informal grouping, the combined GDPs, populations, and growing influence have triggered pushback from Western countries and multilateral groupings.
- The idea of an alternative reserve currency to the US dollar took shape during the 2024 Summit, where Russian President Vladimir Putin said that the move is primarily driven by efforts to deter the ‘weaponisation’ of the USD.
“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,” Trump said in a post on Truth Social.
In addition to South Africa, BRICS also counts Egypt and Ethiopia as member nations, and Uganda and Nigeria as partner countries. The US is engaged in a trade war with China, and has worked to cut off Russia from the international financial structures over the Russia-Ukraine War. It has also imposed increasing sanctions on Iran over its nuclear program.
Will Trump’s Threats Work?
Although the bloc includes some traditional adversaries, such as Iran and Saudi Arabia, and Egypt and Ethiopia, its loose formation has created a prominent platform of shared interests, including the future of world reserve currencies. President Trump has zeroed in on the likely replacement of the USD as a major topic, from the early stages of 2024 campaigns.
The future of dollar dominance has also been a major topic among multilateral financial systems, with the think tank The Official Monetary and Financial Institutions (OMFIF) estimating that its share of world reserves could decline below 50% over the next 25 years. While the long-running discussions among BRICS nations have not resulted in any significant currency moves, Trump’s repeated threats indicate that there is a genuine concern of the future of the USD as a global reserve currency.
Seen from a wider perspective, Washington’s threats to BRICS-made of Global South countries primarily to counter Western dominance of financial and geopolitical systems-may actually be counter productive. The Trump administration, both in its first and current iterations, has shown a preference for tarriffs as a tool to get its way on issues outside of trade. This will further complicate US relations across the globe, even as its strengthening economy and currency raise the immediate prospects of the USD.
