In a bold move, President-elect Donald Trump has reignited concerns over de-dollarization by threatening to impose 100% tariffs on BRICS nations if they continue efforts to reduce reliance on the U.S. dollar.
Trump’s comments, made on his Truth Social platform, have intensified debates about the global reserve currency’s future, reported ZeroHedge.
BRICS—an alliance of Brazil, Russia, India, China, South Africa, and others—has been advocating for a shift away from the dollar in favor of bilateral trade in local currencies, though progress remains modest.
The push to bypass the dollar has gained momentum since the sanctions imposed on Russia following its invasion of Ukraine.
BRICS leaders have occasionally floated the idea of creating a unified reserve currency using a mix of national currencies. Despite this, analysts argue the proposal is more rhetoric than reality.
Internal BRICS trade represents only about 1% of global commerce, and the bloc’s share of global reserves stands at a modest 5%, leaving the dollar’s dominance unchallenged.
Trump’s rhetoric reflects his concern over the dollar’s central role in the global economy. At recent public appearances, he warned that losing this status could relegate the U.S. to “Third World” conditions.
By threatening severe tariffs on any nation attempting to replace the dollar, Trump has sent a clear message: adherence to dollar hegemony is non-negotiable.
However, critics question the feasibility of enforcing such a policy, given BRICS’ combined economic power, which accounts for 37% of global GDP.
While Trump remains resolute, BRICS nations have shown signs of optimism about long-term de-dollarization strategies.
At a recent summit in Kazan, Russia, leaders emphasized increasing the use of national currencies in trade and explored establishing a grain exchange to bolster food security. These initiatives highlight the bloc’s focus on economic integration rather than outright monetary dominance.
Economists are skeptical about the feasibility of BRICS displacing the dollar. Despite the growing usage of the Chinese yuan in global transactions, it still represents only 3% of international payments, far behind the dollar’s 88%. Experts note that even if a BRICS currency were created, it would primarily serve internal trade rather than challenge the dollar’s global finance supremacy.
Russia, a key BRICS member, responded to Trump’s threats by predicting that economic coercion would accelerate the global trend toward de-dollarization.
Kremlin officials argue that diversifying trade currencies reflects growing disillusionment with the dollar as a reserve currency. Still, analysts maintain that the dollar’s dominance is underpinned by the strength of U.S. financial markets and global demand for dollar-based assets.
As the U.S. dollar continues to dominate global reserves and transactions, the BRICS bloc faces significant challenges in presenting a viable alternative. While their de-dollarization efforts are unlikely to unseat the greenback in the near future, the growing conversation around currency diversification signals a shifting economic landscape.