Donald Trump, who is about to take office in the White House, warned the BRICS countries that he would demand their commitment not to create new currencies to replace the dollar, threatening with a 100% tariff.
Trump warns BRICS countries 'not to attempt to escape the dollar'
Trump posted on social media over the weekend:
The idea that BRICS countries are trying to escape the dollar while expecting the United States to stand by has come to an end. We will demand these countries commit to not creating a new BRICS currency or supporting any other currency to replace the strong dollar, otherwise they will face a 100% tariff and bid farewell to the opportunity to sell to the U.S. economy. It is impossible for BRICS countries to replace the dollar in international trade, and any country attempting to replace the dollar should wave goodbye to the United States.
According to previous reports, the BRICS group, composed of Brazil, Russia, India, China, and South Africa, is working on creating a payment system based on blockchain and digital technology while continuously reducing dependence on dollar settlements. This year, the BRICS group has also expanded to include Iran, the United Arab Emirates, Ethiopia, and Egypt.
Trump and his economic advisors have been discussing how to punish those allies and rivals seeking to engage in bilateral trade using currencies other than the dollar. These measures include considering export controls, currency manipulation allegations, and trade taxes. Trump has long emphasized that he wants the dollar to continue as the world's reserve currency and has stated that he will not allow countries to abandon the dollar, as this would impact the U.S.
Is de-dollarization that easy?
Russian President Vladimir Putin is an advocate for weakening the dollar's international status, primarily because Russia has been banned from using SWIFT for international remittances and other economic sanctions due to the Russia-Ukraine war.
China's recent rise has kept discussions about whether the yuan could replace the dollar ongoing, but despite the yuan's progress in international trade in recent years, this often comes at the expense of currencies other than the dollar. Financial media M Square has recently substantiated with numerous data that replacing the dollar may not be as easy as imagined!
Data including global foreign exchange trading volume, the proportion of currencies used in SWIFT international payments, and dollar reserves held by various countries all show that the dollar's usage globally remains far ahead. Historical observations suggest that even with the rise of emerging countries, they would need to surpass the U.S. economically for decades before they have a chance to gradually replace the dollar as a more widely circulated currency.
However, Trump’s threats can be seen as a precautionary measure. Just as the U.S. has been actively preventing the development of Chinese technology in recent years, stopping BRICS countries from de-dollarization can also be seen as a way to prevent other countries from surpassing the U.S. in speed and opportunity, corroborating Trump's long-standing slogan 'Make America Great Again'!
This article warns BRICS countries not to attempt to escape the dollar; is de-dollarization that easy? Originally appeared in Chain News ABMedia.