In a bold statement over the weekend, President-elect Donald Trump issued a warning to nine nations in the BRIC alliance—comprising Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates—threatening to impose 100 percent tariffs if they undermine the U.S. dollar. This declaration underscores the Trump administration’s intent to maintain the dollar’s dominance in international trade.
The BRIC nations and other developing countries are increasingly concerned about U.S. dominance in the global financial system, particularly as the dollar accounts for about 58 percent of world foreign exchange reserves, according to the International Monetary Fund. Complaints about this financial hegemony have grown, especially as these nations seek alternatives to the dollar, a process termed “de-dollarization.”
Trump emphasized the need for a commitment from these countries not to establish a new BRICS currency or endorse any alternative to the U.S. dollar. If they fail to do so, he warned they would face substantial tariffs and a detrimental impact on their ability to sell goods to the U.S. economy.
Pointing to recent discussions, Russian President Vladimir Putin has argued that the dollar is being “weaponized,” pushing the BRIC nations to explore alternate financial systems, such as a potential new payment network that could circumvent the Western-centric SWIFT system. Trump, however, asserted that there is “no chance” the BRIC alliance will succeed in dethroning the dollar as the primary global trade currency.
Despite the present tensions, insights from research conducted by the Atlantic Council suggest that the U.S. dollar is likely to remain secure as the primary global reserve currency in the near future.
This announcement comes after similar threats made towards Mexico, Canada, and China regarding tariffs aimed at curbing illegal immigration and drug trafficking. Encouragingly, Mexican President Claudia Sheinbaum expressed optimism about avoiding a trade war, while Canadian Prime Minister Justin Trudeau returned from his meeting with Trump without guarantees against tariffs.
Overall, the situation highlights the complexities of international trade dynamics and the U.S. stance on maintaining its economic position. While challenges are evident, the ongoing conversations show a willingness among some leaders to seek cooperation and resolution, suggesting potential avenues for constructive dialogue moving forward.