 "Trump warns BRICS nations that he slap 100 per cent tariff on trade if they persue de-dollarisation. File Image / AP")
A week after assuming the presidency, US President Donald Trump reiterated his tariff threat to Brics nations, which comprises Brazil, Russia, India, China and South Africa along with other newly appointed countries. Trump issued the repeated warning in the latest post on his own social media platform TruthSocial. The Republican firebrand made a similar statement right after winning the 2024 US Presidential elections.
“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 Truth Social on Thursday. “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,” he added.
In recent years Brics has become one of the most economically powerful groups. Two of its member states are among the top five largest economies in the world. The group has expanded in a significant way following the inclusion of countries like Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates. Which comes with its strength.
Brics and the US dollar
It is pertinent to note that the intergovernmental organisation was formed in the year 2009. The main of the group has always been to counter dominance by the US and its Western allies. Over the years, the economies of the member nations rose at an exponential rate. The Brics continues to represent nearly half of the world’s population and is considered a counterpart to the G7 group of countries.
In the past, the economic bloc has often suggested introducing another reserve currency. The idea gained momentum especially after the West imposed sanctions on Russia following the latter’s military operation in Ukraine in 2022.
However, many questioned the group’s aspiration since the power of the US dollar in the world has strengthened recently. The American dollar still remains the world’s primary reserve currency and there is a huge worldwide reliance on it.
How India is navigating the rough waters
In recent years, India has attempted to reduce its reliance on the US dollar to internalise the Indian rupee. In 2022, following the sanctions on Russia, the Reserve Bank of India (RBI) has allowed invoicing and payments for international trade in Indian rupees.
While addressing the matter at Kazan, Prime Minister Narendra Modi said: “India welcomes efforts to increase financial integration among Brics countries and trade in local currencies and smooth cross-border payments will strengthen our economic cooperation.”
Impact Shorts
More ShortsIn November 2024, External Affairs Minister S Jaishankar said at the India-Russia Intergovernmental Commission meeting in Mumbai that “mutual settlement of trade in national currencies is of great importance, especially in the current circumstances”. However, India is also aiming to strengthen its ties with the Trump administration to avoid such tariffs.