WASHINGTON (reuters) – United States President-elect Donald Trump called on Saturday for BRICS member countries to pledge not to create a new currency or support another currency to replace it, under penalty of tariffs. 100%.
“We demand that these countries pledge not to create a new BRICS currency or support any other currency that replaces the mighty US dollar,or they will suffer 100% tariffs and say goodbye to sales to the fantastic North American economy,” Trump wrote. his social media platform, Truth Social.
“They can look for another ‘idiot’. There is no chance that the BRICS will replace the US dollar in international trade, and any country that tries should say goodbye to the United States,” Trump added.
As of January this year, the Brics group has had ten full members. In addition to Brazil, Russia, India, China and South Africa, Iran, Saudi arabia, Egypt, Ethiopia and the United Arab Emirates have joined the bloc as permanent members.
In October, Brazilian President Luiz Inácio Lula da Silva, at a summit of Brics countries in Kazan, Russia, defended that the bloc of emerging countries should move forward in creating alternative means of payment among themselves, avoiding the need to use dollar.
Developing a clearing mechanism for payments in local currencies is one of Brazil’s BRICS priorities, which wants to see the bloc less dependent on the use of the dollar in its internal transactions. Brazil will take over the presidency of the bloc from this year and during 2025, and intends to accelerate this proposal and also expand the operations of the New Development Bank, the Brics bank, currently chaired by former president Dilma Rousseff.
(Reporting by lucia Mutikani and Ismail Shakil,with additional reporting by Alberto Alerigi Jr,in Sao Paulo)
How coudl BRICS’ pursuit of option currencies impact global markets and economies?
Interview with Dr. Emily Richards, Geopolitical Economist
editor: Thank you for joining us today, Dr. Richards. With President-elect Trump’s recent comments regarding BRICS, can you elaborate on what his call for member countries not to create an alternative currency signifies for the global economy?
Dr. Richards: Certainly. Trump’s insistence on BRICS members pledging not to develop a new currency reflects a notable concern about the potential for the U.S.dollar’s dominance to be challenged. By threatening 100% tariffs, he is positioning the U.S. as a gatekeeper to economic engagement, essentially saying that any country attempting to sidestep the dollar could face serious economic repercussions. This could signal a shift toward more protectionist measures in international trade.
Editor: Given the recent expansion of BRICS to include countries like Iran and Saudi Arabia, how do you see their motives aligning with Trump’s assertions?
Dr. Richards: The recent addition of nations such as Iran and Saudi Arabia demonstrates BRICS’s ambition to enhance its economic clout on the world stage. These countries, alongside Brazil, Russia, india, China, and South Africa, want to reduce their reliance on the dollar—an objective voiced strongly by brazilian president Lula. While Trump’s statement may deter some countries from pursuing alternative currencies, the ongoing discussions about creating local currency payment systems show that the desire to minimize dollar dependency is indeed robust among BRICS nations.
Editor: Brazil seems to be taking a leading role in advocating for alternative means of payment. What implications does this have for the global financial system?
Dr. richards: Brazil’s initiative to establish a clearing mechanism for local currencies underscores a critical shift in the dynamics of international trade. If successful, this could pave the way for a more multi-polar world economic system, where multiple currencies facilitate trade rather than a single dominant one like the dollar. This could potentially lessen the U.S.’s influence over global finance but may also create volatility in markets as new currency systems are established.
Editor: How might this movement impact trade relations between BRICS countries and the United States?
Dr. Richards: A move away from the dollar could complicate trade relations significantly.If BRICS nations begin transacting in their local currencies, it could lead to increased economic friction with the U.S. President Trump’s strong statements could be both a protective measure for the U.S. economy and a rallying cry for nationalist sentiment. However, it’s also possible that the U.S. could seek to strengthen its trade partnerships with nations that remain dollar-focused out of concern for losing economic leverage over BRICS countries.
Editor: What advice can you offer to businesses operating within or trading with BRICS nations in light of these developments?
Dr. Richards: Businesses should closely monitor the evolving landscape of international trade and be prepared to adapt. This means staying informed about currency trends and exploring hedging options against potential currency risks. Building flexible supply chains and establishing relationships in emerging markets could also mitigate risks associated with fluctuating tariffs and trade policies. Understanding the strategic goals of BRICS nations will be key to navigating these challenges.
Editor: Thank you, Dr. Richards,for sharing your valuable insights on this pressing topic. It will be interesting to see how these developments unfold in the coming years.
Dr. Richards: Thank you for having me.the implications of these geopolitical dynamics are critical to understanding the future of international trade and economic relations.