The recent threats by Donald Trump to impose 100% tariffs on BRICS members that will support a new currency alternative to the dollar have raised many discussions.
Despite the harshness of his statements, many analysts believe that these measures might not be sufficient to stop the process of de-dollarizzazione.
In this article, we will explore the implications of these threats and analyze how the launch of a new BRICS currency could influence the bull and bear cryptocurrency markets.
Donald Trump threatens 100% tariffs for BRICS members who will support a new fiat currency
A few weeks ago Donald Trump announced that he will fight the idea of BRICS launching a new currency alternative to the US dollar.
The newly elected president of the United States has threatened all members of the alliance (Brazil, Russia, India, China, and South Africa) with imposing 100% tariffs if they wish to support the de-dollarization process.
The objective of Trump is clear: to dissuade these countries from creating and using a new currency, thus maintaining the dominance of the dollar as the international reserve currency.
We remind that the dollar represents about 58% of the world’s reserves, according to the IMF, as well as the main currency for trading commodities like oil.
The Tycoon raised his voice on Truth Social, his social platform, formally asking the BRICS countries to abandon this political agenda, under penalty of exclusion from the American markets.
“We ask these countries to commit to not creating a new BRICS currency, nor to support any other currency to replace the mighty US dollar, otherwise they will face 100% tariffs and should expect to say goodbye to sales in the wonderful US economy”.
The latest tariff threat from Trump comes after he himself threatened to impose tariffs of 25% on everything imported from Mexico and Canada, and an additional 10% tax on goods coming from China, as a way to force countries to do more to stop the flow of illegal immigration and drugs into the United States.
Some members of the BRICS have promptly complied with the impositions of Trump, such as India, which has distanced itself from any de-dollarization initiative.
During the Doha Forum held in New Delhi, Indian External Affairs Minister S Jaishankar clarified that the United States is their trading partner and that they have no interest in weakening the dollar.
The Indian central banker also questioned the feasibility of a BRICS currency given the “geographical spread of the countries […[ unlike, for example, the eurozone which has geographical contiguity”.
Trump’s imposition might not serve to block de-dollarization
Trump’s threats might not be enough to prevent the launch of a new currency by the BRICS that could counter the rise of the dollar.
The members of the alliance and other developing nations claim to be tired of America’s dominance over the global financial system.
These countries are motivated by a series of economic and geopolitical reasons to reduce their dependence on the dollar, and they will continue to go all the way.
In this regard, the director of the Institute of Social Sciences, Ash Narain Roy, stated that Trump’s impositions on the BRICS will not work.
Roy emphasized that Trump’s 100% tariff threats will not hit any country, but will directly harm the United States.
The idea of applying 100% tariffs will end up increasing prices to the detriment of the consumer, contributing to the rise of inflation on foreign goods.
Furthermore, it is worth noting how the emerging economies that have detached from the dollar have made great progress recently, fueling a collective confidence in the strategy of de-dollarization.
The BRICS alliance has made it clear that the agenda of de-dollarization remains their long-term goal. The new Trump administration, in its clumsy attempt to reassert American supremacy, will likely not slow down the ambitions of the BRICS.
To bypass tariffs, member countries like China have developed their own cross-border payment system called CIPS (Cross-Border Interbank Payment System), which offers an alternative to the SWIFT system dominated by the United States. Similarly, Russia has increased its gold reserves and has entered into bilateral trade agreements with numerous countries to use alternative currencies to the dollar.
Furthermore, the advent of blockchain technology and digital currencies is facilitating the game for BRICS. Cryptocurrencies and digital currencies issued by central banks offer new transaction methods that bypass the traditional banking systems dominated by the dollar.
https://twitter.com/runews/status/1833775249470472197
What impact would the launch of a new BRICS currency have on the crypto market?
The introduction of a new BRICS currency could have contrasting effects on the cryptocurrency markets. On one hand, it could increase the adoption of cryptocurrencies within the BRICS countries, as these could be seen as a safe and stable alternative for international transactions.
The greater adoption of cryptocurrencies could lead to an increase in their value and market capitalization.
Putin with Russia have recently opened up to Bitcoin and the crypto world, recognizing digital assets as property.
https://twitter.com/BRICSinfo/status/1862477598187474974
In any case, it is more likely that the BRICS allies will decide to use a CBDC or a stablecoin to facilitate monetary exchange within their own circuit.
It is unlikely that these will start trading exchanges in Bitcoin or Ethereum, despite it being possible that they will be adopted to strengthen the Treasury and weaken Donald Trump’s cryptographic supremacy plans.
There is also considerable uncertainty about the potential negative effects that a BRICS currency could trigger on the crypto markets.
Investors might react in a volatile manner to news of an increase in de-dollarization, leading to strong bear swings in cryptocurrency prices. Furthermore, if the new BRICS currency were to be perceived as more stable and secure compared to existing stablecoins, it could reduce interest and adoption of the entire crypto sector.
What is certain is that the launch of a new BRICS currency would represent a significant change in the global financial landscape. This change could significantly affect the logic of world supremacy, with Trump having a new challenge to face during his term as President.