Trump Issues Warning of 100% Tariff on BRIC Nations If They Undermine US Dollar

Donald Trump, the President-elect of the United States, has issued a warning of imposing 100% tariffs on nine nations if they attempt to undermine the US dollar. This warning targets the BRIC alliance, which includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates. Turkey, Azerbaijan, and Malaysia have shown interest in joining this group.

The US dollar remains the dominant currency in global trade and finance. It accounts for about 58% of the world's foreign exchange reserves, as reported by the International Monetary Fund (IMF). Major commodities like oil are still mainly traded in dollars. However, some developing countries and BRICS members express dissatisfaction with America's control over the global financial system.

BRICS Alliance and De-dollarisation

The BRICS alliance is increasing its share of global GDP and aims to trade using non-dollar currencies. This process is known as de-dollarisation. In a post on Truth Social, Trump stated: "We require a commitment from these Countries that they will neither create a new BRICS Currency nor back any other Currency to replace the mighty U.S. Dollar or they will face 100% Tariffs."

During an October summit of BRIC nations, Russian President Vladimir Putin accused the US of weaponising the dollar. He remarked that it was a significant error and said: "It's not us who refuse to use the dollar... We are forced to search for alternatives." Russia is advocating for a new payment system to bypass Western sanctions and facilitate trade with partners.

US Dollar's Global Role

Research indicates that the US dollar's status as the primary global reserve currency remains secure for now. An Atlantic Council model confirms that the dollar continues to dominate other currencies in both near and medium-term scenarios. Trump's recent tariff threat follows his earlier proposal to impose 25% tariffs on imports from Mexico and Canada and an additional 10% tax on Chinese goods.

Trump's tariff threats aim to pressure these countries into taking action against illegal immigration and drug trafficking into the US. Mexican President Claudia Sheinbaum expressed confidence that a tariff conflict with the United States could be avoided after a call with Trump. Meanwhile, Canadian Prime Minister Justin Trudeau returned home without assurances from Trump regarding potential tariffs on Canada.

Despite these tensions, experts believe that BRICS will not replace the US dollar in global trade anytime soon. The US dollar's role as a reserve currency is expected to remain unchallenged in the foreseeable future.