Donald Trump, who is about to take over the White House, has warned the BRICS countries that he will demand that they pledge not to create new currencies to replace the US dollar, and will threaten them with a 100% tariff.
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ToggleTrump warns BRICS countries 'not to try to get rid of the US dollar'
Trump posted on a social platform over the weekend:
The idea that the BRICS countries will try to get rid of the US dollar and expect the US to stand idly by is over. We will demand that these countries make a commitment that they will not create a new BRICS currency, nor will they support any other currency to replace the mighty US dollar, or they will face a 100% tariff and say goodbye to the opportunity to sell to the US economy. The BRICS countries cannot replace the US dollar in international trade, and any country that tries to replace the US dollar should wave goodbye to the US.
According to previous reports, the BRICS group, consisting of Brazil, Russia, India, China and South Africa, is working to build a payment system based on blockchain and digital technology, and is continuing to reduce its dependence on US dollar settlement. The BRICS group has also expanded this year to include Iran, the United Arab Emirates, Ethiopia and Egypt.
Trump and his economic advisers have been discussing how to punish allies and rivals who seek to conduct bilateral trade in currencies other than the US dollar, including considering export controls, currency manipulation charges and trade taxes. Trump has long emphasized that he wants the US dollar to continue to serve as the world's reserve currency, and has stated that he will not allow countries to abandon the US dollar, as this would be a blow to the US.
Is de-dollarization that easy?
Russian President Vladimir Putin is an advocate of weakening the international status of the US dollar, mainly because Russia has been banned from using SWIFT for international money transfers and other economic sanctions due to the Russia-Ukraine war.
China's rise in recent years has also led to ongoing discussions about the renminbi potentially replacing the US dollar, but although the renminbi has made progress in international trade in recent years, this is often at the expense of currencies other than the US dollar. In a recent podcast, M Square Finance also provided extensive data to prove that replacing the US dollar may not be as easy as imagined!
Data on global foreign exchange trading volume, the currency composition of SWIFT international payments, and the US dollar reserves of various countries all show that the US dollar's usage share globally still far exceeds others. And from a historical perspective, even if emerging countries rise, they need to surpass the US economically for decades before they have a chance to gradually replace the US dollar as the currency with larger circulation.
However, Trump's threat this time can also be seen as a precautionary measure, just as the US has been working hard in recent years to prevent the development of Chinese technology and the de-dollarization of the BRICS countries, which also confirms Trump's long-standing slogan "Make America Great Again"!
