Trump threatened to impose 100% tariffs on these countries if they support or create a new currency to rival the US dollar, raising questions about the future of global trade and economic stability. In this article, we delve into the significance of the BRICS group, their push for de-dollarization, Trump’s tariff strategy, and whether the US and BRICS nations are heading toward an economic showdown.
Who Are the BRICS Nations, and Why Are They Important?
The BRICS group represents some of the world’s largest emerging economies, collectively home to 3.5 billion people—about 45% of the global population. The bloc now includes 11 members after welcoming new nations such as Iran, the UAE, and Ethiopia. As of last February, thirty-four countries expressed interest in joining the BRICS bloc, which is already a powerhouse.
Together with Iran, Saudi Arabia, and the UAE, BRICS members collectively produce 44% of the world’s crude oil and account for nearly 28% of global GDP, valued at $28.5 trillion.
Initially formed to foster cooperation among developing nations and counterbalance the economic dominance of Western powers, BRICS has grown into a platform for challenging global financial norms, including the US dollar’s dominance. Key members like China and Russia have taken the lead in advocating for an alternative global reserve currency, citing political weaponization of the dollar.
What Is De-Dollarization, and Why Are Some BRICS Nations Pushing for It?
De-dollarization refers to reducing the global reliance on the US dollar for trade, investment, and reserves. The dollar’s status as the world’s primary reserve currency gives the US significant geopolitical leverage, allowing it to impose sanctions and influence global financial markets.
Countries like Russia and China argue that this power undermines their sovereignty and have sought alternatives.
At the 2023 BRICS summit, the group explored the possibility of a shared currency to facilitate trade and bypass the dollar-dominated financial system. For instance, both Russia and China currently conduct their trade primarily in rubles and yuan, advocating for payment systems free from the dollar’s influence. At the 2024 BRICS summit, Russian President Vladimir Putin criticised the dollar as a “weapon,” warning that continued US reliance on financial sanctions would backfire in the long run.
However, despite these ambitions, the dollar’s entrenched infrastructure—such as its dominance in cross-border payments and reserves—makes an immediate shift unlikely. The lack of a robust, universally accepted alternative currency poses a significant challenge for BRICS nations.
Can The BRICS Truly Move Away from the Dollar?
While some BRICS nations are vocal about challenging the dollar, others, like India and Brazil, are more cautious. They fear that de-dollarization could strain relations with Western countries and tilt the bloc toward China’s influence. India, in particular, is wary of BRICS becoming a platform for anti-Western policies, preferring a balanced approach that maintains its trade relationships with both the US and China.
Moreover, logistical and political barriers hinder the creation of a BRICS currency. Questions remain about governance, valuation mechanisms, and how such a currency would function in a globalised economy where the dollar underpins finance. Without these answers, the dollar’s dominance appears secure for decades to come.
Trump’s Tariffs as a Campaign Tool: Strategy or Threat?
Donald Trump’s threats to impose 100% tariffs on BRICS nations signal his determination to protect the dollar’s status as the global reserve currency. On the campaign trail, Trump repeatedly emphasised that any shift away from the dollar would harm the US economy.
In a March interview, Trump declared that he would “make it costly for countries to go off the dollar.” His proposed 100% tariffs are part of a broader strategy to deter BRICS from challenging US dominance. Tariffs—taxes imposed on imported goods—serve as a tool to protect domestic industries, raise government revenue, and, in Trump’s view, strengthen America’s negotiating position.
Tariffs have become a cornerstone of Trump’s economic vision. By threatening steep tariffs, Trump aims to pressure trading partners into compliance while signaling to his domestic base that he prioritizes American jobs and industries. During his first term, he used tariffs not only as economic levers but also as bargaining chips in high-stakes trade negotiations, particularly with China, Mexico, and Canada.
However, critics argue that tariffs often backfire, increasing costs for American consumers and businesses while straining international relations. For more information about how Trump’s tariffs could affect Americans and derail Fed policy, read our previous article.
Trump’s own Treasury Secretary pick, Scott Bessent, suggested that many of Trump’s tariff threats might simply be part of his negotiating playbook. By proposing extreme measures, Trump seeks to gain leverage without necessarily implementing such policies.
Are We Heading Toward a Trade War?
The clash between the US and BRICS nations highlights broader tensions in global trade and finance. On one side, BRICS is pushing to reshape the international order by reducing dependence on the dollar. On the other, the US is determined to maintain its economic dominance, even if it means escalating trade disputes.
A global trade war could have far-reaching consequences, destabilising markets, increasing costs, and slowing economic growth. For now, the likelihood of BRICS fully abandoning the dollar remains low, given the dollar’s entrenched role in the global financial system. However, the bloc’s gradual shift toward de-dollarization signals that the world may be entering a new era of economic competition.
Bottom Line
As the BRICS nations explore alternatives to the US-led financial system, their actions are reshaping the global economic landscape. While de-dollarization remains an ambitious goal, the group’s efforts highlight growing dissatisfaction with the current system.
Additionally, in recent years, Russia, China, and other countries have been actively accumulating Gold reserves. This trend also reflects a growing desire to diversify away from the US dollar and reduce reliance on Western financial systems.
Trump’s tariff threats underscore the stakes for the US, which views the dollar’s dominance as vital to its economic and geopolitical power. Whether these threats are a negotiation tactic or a precursor to future events, the risks of a global trade war remain significant.
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