In a surprise move, US President-elect Donald Trump has demanded a “commitment” from BRICS nations, including China, India, and Russia, to refrain from creating a new currency or backing any other currency to replace the US dollar. Failure to comply, Trump warned, would result in 100% tariffs and denial of access to the US economy.
The motivations behind Trump’s sudden tirade are unclear, but skeptics of the US economy’s long-term viability, driven by Russia and China, have been exploring alternative currencies and methods for global trade. The expanded BRICS alliance, which accounts for 35% of the global economy, has been deliberating on “de-dollarisation” – a move that has clearly rattled Trump.
In a characteristically blunt social media post, Trump fired a warning shot at the BRICS nations, stating, “The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER”. He emphasized that the US requires a commitment from these countries to neither create a new BRICS currency nor back any other currency to replace the US dollar.
The US dollar’s dominance in global trade is rooted in the perception of America as a stable and reliable economic powerhouse. However, with mounting US debts and deficits, and growing political uncertainty, this status is being called into question . Despite these challenges, the dollar remains the most widely held reserve currency, accounting for over 58% of official foreign exchange reserves worldwide.
Most US experts believe that the dollar’s position is secure, at least in the near term. The last time the world switched its reserve currency, from the British pound to the US dollar, was over 80 years ago, and the transition was relatively seamless. However, Trump’s sudden warning suggests that he sees some discomfort on the horizon as he prepares to take office for a second term.