Trump threatens BRICS nations with 100% tariffs over dollar alternatives

President-elect Donald Trump threatened BRICS countries with 100% tariffs unless they commit to maintaining the US dollar as the trading currency and not create an alternative currency to the USD.

The President-elect also threatened to cut access to the American market.

BRICS is an intergovernmental organization created in 2009 and involves Brazil, Russia, India, China, and South Africa. On January 1, 2024, Iran, Egypt, Ethiopia, and the United Arab Emirates joined the bloc.

Trump has long stressed that he wants the USD to remain the world’s reserve currency. His economic advisers are exploring measures like export controls and financial penalties to deter other countries from ditching the greenback.

The BRICS nations discussed de-dollarization at a summit in 2023. Russia has been leading the effort against the dollar’s dominance since 2022, when the US imposed sanctions on Russia for invading Ukraine.

Russian President Vladimir Putin has long spearheaded efforts within the BRICS countries to diminish the US dollar’s role as the world’s reserve currency and promote the development of alternatives.

Trump’s tariff threats have already caused tensions in Canada, China and Mexico. Canada and Mexico are trying to negotiate to avoid higher tariffs, while China might let its yuan lose 10-15% value to stay competitive, according to JPMorgan Chase & Co.

Looking forward
The US dollar has been the global trading currency for oil, gold, and more since the end of World War II. Experts believe it will likely remain dominant due to its robust payment systems. According to the IMF, it represents around 58% of the world’s foreign currency reserves.

Overall, Trump’s actions mean to protect the dollar’s power but could create global trade conflicts.