Experts Weigh In on Trump’s Threatened Tariffs on Anti-Dollar BRICS

Economic observers are determining if President-elect Donald Trump’s threat to slap a 100 percent tariff on a coalition of developing economies if they try to abandon the U.S. dollar as the chief international reserve currency is necessary.

BRICS—a nine-nation alliance of Brazil, China, Egypt, Ethiopia, India, Iran, Russia, South Africa, and the United Arab Emirates—has been at the forefront of the de-dollarization initiative in recent years.

The global campaign to shift away from the greenback generated significant momentum following Moscow’s invasion of Ukraine.

Officials from these countries have been employing measures to reduce their reliance on the buck.

In addition to engaging in bilateral trade settled in local currencies, there has been years-long speculation that the bloc would establish a new reserve currency to rival that of the dollar.

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If the BRICS followed through on a basket of currencies—tossing the ruble, yuan, rupee, and real into a big bowl and creating one uniform currency—it would not affect the dollar, economist Peter St Onge says.

Internal BRICS trade accounts for a little more than 1 percent of global trade, and the group’s share of worldwide reserves is approximately 5 percent.

“A basket of basket cases does not stand a snowball chance of replacing the dollar, at least outside trade between BRICS countries, say, between China and Russia,” St Onge said in a video posted to X in October.

“With those numbers, a basket of BRICS will barely make a dent in the dollar.”

Still, Trump has been vocal about employing the tariff weapon to halt the formation of a rival to the U.S. dollar.

“We require a commitment from these countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty U.S. dollar or, they will face 100 percent tariffs, and should expect to say goodbye to selling into the wonderful U.S. economy,” the president-elect recently wrote.

“They can go find another ’sucker!’”

While he does not believe BRICS will successfully replace the U.S. dollar in worldwide trade, Trump stated that any country that attempts to “should wave goodbye to America.”

This is not the first time Trump has weighed in on imposing tariffs on anti-dollar nations.

In October, speaking at the Economic Club of Chicago with Bloomberg, Trump warned that the United States could slip into “Third World status” if it lost reserve dominance.

He also pledged to implement a 100 percent levy on any country considering moving away from the dollar.

“If a country tells me, ‘Sir, we like you very much, but we’re going to no longer adhere to being in the reserve currency. We’re not going to salute the dollar anymore.’ I’ll say, ‘That’s OK, and you’re going to pay a 100 percent tariff on everything you sell into the United States, and we love your product. I hope you sell a lot of it into the United States, but you’re going to pay 100 percent tariff,’” Trump said.

“He will then follow it up by saying, ‘Sir, it would be an honor to stay with the reserve currency.’”

At a September campaign rally, Trump told the crowd that many countries are exiting the dollar.

“They’re not going to leave the dollar with me,” he said.

While there have been signals that the group would start a reserve currency, officials have appeared to veer away from this goal, says Michael Wan, a senior currency analyst at MUFG Research.

“It’s unclear how 100 percent tariffs on a group of countries that make up 37 percent of global GDP would happen in practice, but serves as a possible preview of tariff diplomacy under Trump 2.0.”

Additionally, more countries have expressed interest in becoming official BRICS members.

Views on the Anti-Dollar Crusade

Despite the BRICS expansion and the formation of BRICS+—an extension of the formal partnership of other emerging economies—the U.S. dollar hegemony has remained intact.

Its dominance in the world economy has strengthened amid the Federal Reserve’s 2 1/2-year tighter monetary policy, robust growth prospects, and geopolitical tensions.

The U.S. dollar index, a gauge of the buck against a weighted basket of currencies, has surged 5 percent this year, even as the Federal Reserve started its new easing cycle in September.

Other currencies belonging to BRICS members have weakened considerably against the dollar.

India’s GDP growth rate eased to a lower-than-expected 5.4 percent in the third quarter, down from 6.7 percent in the second quarter.

Beijing’s economic conditions could cool to 4.5 percent in 2025.

Still, BRICS members appear optimistic that their long-term de-dollarization strategy will work.

At last month’s annual BRICS summit in the Russian city of Kazan, the group continued to lay the anti-dollar groundwork.

Leaders and representatives reiterated their pledge to bolster economic ties and increase the representation of their national currencies in trade and financial transactions.

“A number of BRICS countries are among the world’s largest producers of grain, vegetables, and oilseeds. We propose opening a BRICS grain exchange,” Russian President Vladimir Putin said at the yearly retreat.

“This would facilitate predictable price indicators for products and raw materials, taking into account their special role in ensuring food security.”

Brazil controls 60 percent of all soybean exports, Russia is the world’s largest wheat exporter, and India maintains 40 percent of the international rice trade, including 65 percent of Basmati shipments.

At the same time, there are mixed views about the BRICS dethroning the king dollar.

According to Dmitry Dolgin, chief economist at ING, BRICS enjoys substantial influence in global exchange reserves and the fuel trade.

However, because gold is the main rival to the dollar, the precious metal is underrepresented in the members’ central banks.

Ultimately, Dolgin says, the U.S. dollar is not facing “immediate danger” in areas such as capital markets and international banking.

Economists at Capital Economics say BRICS faces “significant practical challenges” in launching a currency.

While knocking the dollar off the global currency mountain “is out of the question for the foreseeable future,” the Federal Reserve’s research chief of global financial markets says the yuan’s growth is a trend to monitor in the coming years.

The Fed researcher cited growing usage, government support efforts, and consequences emanating from Western sanctions on Russia as potential reasons for the yuan’s expansion.

“Going forward, it will be interesting to see if the renminbi usage in trade continues to increase and whether that increased usage ultimately leads to a larger fraction of FX reserves being held in renminbi.”

Trump has been wielding the tariff weapon weeks before returning to the White House.

He recently threatened to impose a 25 percent tariff on Canada and Mexico.

The president-elect also said he would hit China with a 10 percent levy in addition to the current crop of tariffs. The aim, Trump says, is to push these countries to improve border security and halt the drug trade.

Russia shot back after Trump’s latest social media threats, warning the measure would backfire on the United States.

“If the United States uses force, as they say, economic force, to compel countries to use the dollar it will further strengthen the trend of switching to national currencies,” Peskov said.

“The dollar is beginning to lose its appeal as a reserve currency for a number of countries.”