US President-elect Donald Trump has issued a strong warning to the BRICS nations (Brazil, Russia, India, China, and South Africa), insisting they refrain from creating a new currency to replace the US dollar in international trade. In a post shared on his Truth Social platform, Trump emphasized that any attempt to move away from the dollar would be met with severe consequences.
“The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is OVER,” Trump declared. He further demanded that these nations commit to neither creating a new currency nor supporting any alternative currency to replace the dollar. If they fail to do so, he warned, they would face 100% tariffs and would be shut out of the US market.
US dollar will not be replaced
This threat is a continuation of Trump’s campaign promise to make it costly for any country to abandon the US dollar. As he prepares to take office again in January, discussions among his economic advisers have intensified regarding how to penalize both allies and adversaries who engage in trade using currencies other than the dollar. Potential measures under consideration include imposing export controls, charges of currency manipulation, and additional tariffs on international trade.
Trump’s stance on the dollar is rooted in his belief that the US must maintain the dollar’s position as the world’s reserve currency. He stated earlier this year in an interview with CNBC that allowing countries to abandon the dollar would harm the US.
Michael Pettis, a senior fellow at the Carnegie Endowment for International Peace, criticized Trump’s approach, suggesting that his desire to both reduce the US trade deficit and increase the dominance of the dollar is contradictory. Pettis argued that these two goals are mutually exclusive and cannot be pursued simultaneously.
BRICS nations debate moving away from USD
The BRICS group has been increasingly vocal about reducing the global reliance on the US dollar, particularly after the US imposed economic sanctions on Russia in 2022. This sentiment gained momentum during their 2023 summit, where the issue of “de-dollarization” was a key discussion point. The group expanded this year to include new members like Iran, the UAE, Ethiopia, and Egypt.
Despite the rhetoric against the dollar, the infrastructure that supports it, such as the global payment systems, continues to give the US currency a significant advantage over others. Even in countries like Russia, where President Vladimir Putin has championed reducing the dominance of the dollar, US dollars remain essential for many transactions. For example, during the BRICS meeting in Kazan, Russia, attendees were advised to bring US dollars or euros, as non-Russian Mastercard and Visa cards were not functional due to international sanctions.
“No chance that BRICS will replace the U.S. Dollar”
Trump has previously expressed his belief that the BRICS nations will not succeed in replacing the dollar in international trade. He reiterated this point over the weekend, stating, “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.”
In addition to his warnings about the BRICS, Trump has also stirred global markets with threats to impose new tariffs on goods from China, Mexico, and Canada. These include a potential 10% tariff on Chinese products and a 25% tariff on all imports from Mexico and Canada if they do not take more action to curb illegal immigration and drug trafficking across US borders.
In response to these potential tariffs, countries like China are preparing strategies to counteract any economic damage, with some analysts predicting that China could allow its currency, the yuan, to depreciate by up to 15% to mitigate the effects of a trade war. Similarly, emerging-market currencies could see an average 5% depreciation in the first half of 2025, according to JPMorgan Chase & Co.
