Potential for a New Wave of Tariff Wars Under Trump
The world may soon face a second wave of tariff wars as Donald Trump takes office in January. The US President-elect has threatened a 100% tariff on the BRICS countries, including India if they attempt to move away from the US dollar for international transactions. This follows a BRICS summit in October where members discussed increasing non-dollar transactions. The BRICS bloc, comprising Brazil, Russia, India, China, and South Africa, has been considering alternatives to the US dollar in trade, raising concerns in the US.
Trump’s Stance on the Dollar and BRICS
In a scathing online post, Trump made it clear that he will not tolerate any attempts by BRICS nations, including Russia, to replace the US dollar. He warned that any country within the bloc that tries to create a new currency or back an alternative currency will face severe consequences, including a 100% tariff. He further stated, “They can go find another ‘sucker’,” emphasizing that there is no chance the BRICS countries could replace the dollar in international trade without facing repercussions. Trump has consistently emphasized the importance of the US dollar in global transactions and has been firm on maintaining its dominance.
BRICS Summit in Russia and Its Impact on the Dollar
The BRICS summit held in Kazan, Russia, in October resulted in a joint declaration to enhance correspondent banking networks within the group and enable settlements in local currencies. However, there were no concrete plans to challenge the US dollar’s global dominance or compete with the SWIFT financial messaging system. Russia, a key player in the BRICS alliance, has shown interest in reducing dependence on the dollar in international trade, which could have significant implications for US trade policies.
India’s Position on De-dollarization and Tariffs
Countries like India have expressed reservations about de-dollarization. Indian Foreign Minister S. Jaishankar clarified that India’s economic and strategic policies do not favor replacing the dollar but are open to workarounds in specific situations, such as when trade partners refuse to accept the dollar. However, Trump has also expressed frustration with India’s tariff regime, which he claims is among the highest. He has criticized India, China, and Brazil for their tariff practices and highlighted reciprocity as a central element of his economic strategy.
Impact of Trump’s Tariff Policies on Global Trade
As Trump prepares to take office, the potential for trade tensions with BRICS nations, particularly India and Russia, seems likely. With tariffs being a central tool in his economic policies, Trump’s approach could significantly alter global trade dynamics and fuel further disagreements with countries challenging the US dollar’s supremacy in international markets.
