President-elect Donald Trump on Saturday demanded a group of developing countries commitment to the use of the U.S. dollar as their reserve currency and threatened to impose a 100 percent tariff if they attempt to abandon it.
“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER,” Trump wrote on his social media platform Truth Social, referring to the acronym for the original group of countries in the bloc — Brazil, Russia, India, China and South Africa.
The geopolitical alliance has since expanded to include Iran, Egypt, Ethiopia and the United Arab Emirates.
“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% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy.”
Officials from the BRICS countries have discussed moving away from the U.S. dollar in recent years including at the 2024 BRICS Summit last month.
The concept gained steam in 2022 when the U.S. imposed massive economic sanctions on Russia over its war in Ukraine.
Trump also said in his post that the countries “can go find another ‘sucker!’ There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America.”
The statement comes as the president-elect steps up his tariff threats, after he announced plans to impose a 25 percent tariff on Mexico and Canada and a 10 percent additional tariff on China over illegal migration and drug trafficking into the United States.
Understanding De-dollarization
The de-dollarization efforts by BRICS aim to reduce dependence on the USD and the US-dominated global financial system.
This move is seen as a way to promote greater economic independence and self-sufficiency among the member countries.
By reducing their reliance on the USD, the BRICS nations hope to insulate themselves from potential economic shocks and sanctions that could be imposed by the US.
The BRICS countries are promoting the use of their own currencies, such as the Chinese yuan, the Russian ruble, and the Indian rupee, in international trade and finance.
They are also developing alternative payment systems, such as the Chinese Cross-Border Interbank Payment System (CIPS), to reduce their reliance on the USD-dominated SWIFT system.
Additionally, the BRICS nations are encouraging the use of local currencies in trade between member countries, reducing the need for USD as an intermediary currency.
