America’s newly elected President Donald Trump on Saturday gave a stern warning to BRICS countries about finding an alternative to the dollar.
Trump has threatened to impose a 100 percent tariff (import duty) on BRICS countries trying to find an alternative to the dollar.
BRICS also includes the world’s two largest emerging economies, China and India.
Among the promises made by Trump during the election campaign, there was also a possibility of imposing a heavy tariff of up to 60% on Chinese products. After this announcement by Trump, there were apprehensions of a trade war intensifying between the world’s two largest economies.
In the past several years, Trump has also targeted India over the American company Harley Davidson.
Both India and China are among the major member countries of BRICS. Trump has often described PM Narendra Modi as his friend. But Trump has also been cornering India on trade-related issues.
What did Trump say?
“The era of being silent spectators to the BRICS’ attempts to move away from the dollar is over,” Trump wrote on his social media platform X handle on Saturday.
“We need a commitment from these countries that they will neither create a new BRICS currency nor support another currency to replace the mighty US dollar, or face 100 percent tariffs.”
“If the BRICS do so, they will have to say goodbye to selling their products in the great US economy. They can look elsewhere. There is no possibility that BRICS will be able to replace the US dollar in international trade and any country that does so should say goodbye to the US,” he wrote.
Last October, the BRICS meeting was held in the Russian city of Kazan, and during that time too there were speculations about the bloc creating its own currency.
The buzz about BRICS currency
This year, Russia chaired the BRICS summit, and no decision was taken on the introduction of BRICS currency.
It was Russia that had put forward the idea of introducing BRICS currency in 2022, which was supported by Brazilian President Lula da Silva.
No decision could be taken on introducing a common BRICS currency in the Kazan meeting, but there was talk of creating a new mechanism for cross-border payments between these countries, which will work with the Western payment system ‘SWIFT Network’.
The BRICS countries want to use local currencies as much as possible among themselves so that the risk of fluctuations in their currencies against the dollar can be reduced.
During the Kazan conference, Russian President Vladimir Putin said, “The use of local currencies in bilateral trade will help in politics-free economic development.”
What did Putin say at the BRICS summit?
During the Kazan summit, Russian President Putin said, “The dollar will remain a major currency in the global financial system, and using it to achieve political objectives reduces trust in this currency and also reduces its potential.”
He said that Russia does not want to leave the dollar or defeat it, but it is being prevented from working with the dollar.
Putin said, “That is why we were forced to look for other options.”
After the attack on Ukraine, the US and Western countries have imposed many economic sanctions on Russia.
Along with Britain and the European Union, many countries including Australia, Canada, and Japan have imposed more than 16,500 sanctions on Russia.
Under these sanctions, about half of Russia’s foreign exchange reserves have been frozen, which is about $ 276 billion.
Apart from this, the European Union has frozen about 70 percent of the assets of Russian banks and has also removed them from the SWIFT banking system.
If the BRICS currency comes, will it replace the dollar?
Countries all over the world use the dollar for payments in mutual trade.
Brazilian President Lula da Silva and Russian President Putin had suggested the creation of a BRICS currency to reduce the dominance of the dollar.
However, there was no discussion about this in the 2023 BRICS summit.
Professor Padraig Carmody of Trinity College Dublin told the BBC last January, “It would be impractical for the BRICS countries to create a common currency because their economies are very different.”
However, he said that it is possible that they may consider creating a new currency for international trade payments in the future or opt for cryptocurrency for international trade.
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