Chinese President Xi Jinping, Russian President Putin and Indian Prime Minister Narendra Modi and other officials attended the BRICS Summit in Kazan, Russia, on October 23, 2024.
Alexey Danichev | Reuters
President-elect Donald Trump on Saturday threatened to impose 100% tariffs on nine countries if they take action to weaken the dollar.
His threat was aimed at countries in the so-called BRIC alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates.
Türkiye, Azerbaijan and Malaysia have applied for membership, and several other countries have expressed interest in joining.
While the dollar is by far the most widely used currency in global commerce and has survived past challenges to its preeminence, alliance members and other developing countries say they are tired of U.S. dominance of the global financial system.
According to the International Monetary Fund, the U.S. dollar accounts for about 58% of the world’s foreign exchange reserves, and major commodities such as oil are still mainly traded in U.S. dollars. However, as the BRICS share of GDP continues to grow and the alliance intends to conduct trade in non-USD currencies (a process known as “de-dollarization”), the dollar’s dominance has been challenged. threaten.
Trump said in the “Truth Society” post: “We ask these countries to promise that they will not create new BRICS currencies or support any other currencies to replace the powerful US dollar, otherwise, they will face 100% tariffs, and should be expected to say goodbye to the wonderful American economy.
At the BRIC summit in October, Russian President Vladimir Putin accused the United States of “weaponizing” the dollar, calling it a “big mistake.”
“It’s not that we refuse to use the U.S. dollar,” Putin said at the time. “But if they don’t let us work, what can we do? We are forced to look for alternatives.”
Russia is particularly pushing to create a new payments system that would provide an alternative to global banking information network SWIFT and allow Moscow to evade Western sanctions and trade with partners.
Trump said it was “impossible” for the BRIC countries to replace the U.S. dollar in global trade and that any country trying to achieve this goal “should wave goodbye to the United States.”
Research shows that the U.S. dollar’s status as the world’s leading reserve currency will not be threatened in the near future.
The Atlantic Council’s model assessing the U.S. dollar’s status as the main global reserve currency states that the U.S. dollar is “safe in the short to medium term” and continues to dominate other currencies.
Trump’s latest tariff threats come after he threatened to impose a 25% tariff on all imports from Mexico and Canada and a 10% tariff on imports from China in a bid to force those countries to do more Stop the flow of illegal immigrants and immigrants.
He has since spoken by phone with Mexican President Claudia Scheinbaum, who said Thursday she was confident a tariff war with the United States could be avoided. Canadian Prime Minister Justin Trudeau returned home on Saturday after meeting with Trump, but offered no assurances that the president-elect would abandon his threat to impose tariffs on Canada.
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