What is BRICS and Why is It Challenging the Dollar?
The BRICS group—comprising Brazil, Russia, India, China, and South Africa—represents a powerful economic bloc seeking to reshape global trade. Established to enhance economic cooperation among emerging markets, BRICS has expanded over the years, with new members such as Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates joining the alliance. One of BRICS’ major initiatives has been exploring alternatives to the US dollar in international trade, a move that has gained traction amid Western sanctions on Russia and increasing global economic diversification.
However, this shift away from the dollar has drawn sharp criticism from former US President Donald Trump, who has threatened severe economic repercussions, including imposing a 100% tariff on BRICS nations if they attempt to undermine the dollar’s dominance in global trade.
Trump’s Stance Against De-Dollarisation
On Friday, Trump issued a stern warning to BRICS countries, making it clear that any attempt to introduce a new BRICS-backed currency or support an alternative to the US dollar would not go unpunished. In a fiery post, he declared:
“The idea that the BRICS countries are trying to move away from the Dollar, while we stand by and watch, is OVER. We are going to require a commitment from these seemingly hostile Countries that they will neither create a new BRICS Currency nor back any other Currency to replace the mighty US Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful US Economy. They can go find another sucker Nation.”
Trump’s statement echoes his earlier warnings in November 2024 after securing the presidential election. His threats reflect his long-standing belief that tariffs can be used as a weapon to protect American economic dominance.
BRICS’ Growing Push for Local Currencies
For years, BRICS members have been working toward reducing reliance on the US dollar. At the 15th BRICS Summit in 2023, Russian President Vladimir Putin advocated for increasing trade in local currencies. This sentiment was reinforced at the June 2024 BRICS foreign ministers’ meeting in Russia, where discussions on using national currencies in trade transactions intensified.
Despite these efforts, the US dollar remains the world’s dominant reserve currency. A report from the Atlantic Council’s GeoEconomics Center found that neither the euro nor BRICS-led initiatives have significantly diminished global dependence on the dollar. Nonetheless, the growing momentum behind de-dollarisation has raised concerns in Washington.
Implications of Trump’s 100% Tariff Threat
Trump’s threats against BRICS align with his broader economic strategy of leveraging tariffs to secure US trade advantages. He has previously targeted major trade partners, including Mexico and Canada, citing reasons such as illegal immigration and drug trafficking.
During his campaign, Trump labeled India a “very big abuser” of trade policies, signaling that his aggressive stance extends beyond BRICS to other key US trade partners. He argues that imposing tariffs will incentivize domestic manufacturing and benefit American businesses.
However, economic experts warn that such tariffs could backfire, leading to higher costs for US consumers and industries that depend on imports. If implemented, Trump’s proposed 100% tariff could escalate trade tensions, disrupt global supply chains, and push BRICS nations to accelerate their shift away from the US dollar.
A New Era of Global Trade Wars?
If Trump’s tariff threats materialize, the global economy could witness a significant shift. The imposition of 100% tariffs would likely strain US relations with BRICS nations, potentially driving them to further their efforts in de-dollarisation. While the US dollar’s dominance remains unchallenged for now, escalating trade tensions could fuel an economic realignment, making BRICS’ vision of a multipolar trade system a more imminent reality. Whether Trump’s warnings deter BRICS or accelerate their push for alternatives remains to be seen, but the stakes in this global financial power struggle have never been higher.
(With inputs from agencies)
