Anamika Dey, editor
Brief news
- President-elect Trump threatened 100% tariffs on nine BRIC countries if they undermine the U.S. dollar’s value, emphasizing the dollar’s dominance in global trade.
- The BRIC nations are exploring alternatives to the dollar, with Russia advocating for a new payment system to bypass Western sanctions.
- Despite these challenges, research indicates the U.S. dollar remains secure as the principal global reserve currency in the near to medium term.
Detailed news
On Saturday, President-elect Donald Trump threatened to impose tariffs of one hundred percent on a group of nine countries if they took any action to damage the value of the United States dollar.
The countries that are members of the so-called BRIC alliance, which includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates, were the targets of his warning.
There have been applications submitted by Turkey, Azerbaijan, and Malaysia to become members, and a number of other nations have expressed interest in joining alongside them.
In spite of the fact that the United States dollar is by far the most widely used currency in international trade and has been able to withstand previous challenges to its preeminence, members of the alliance and other developing nations have expressed their dissatisfaction with the United States’ predominant position in the international financial system.
According to the International Monetary Fund (IMF), the dollar accounts for around 58% of the world’s foreign exchange reserves. Furthermore, for the most part, important commodities such as oil are still purchased and sold using dollars. However, the dominance of the dollar is being threatened by the growing share of GDP that the BRICS nations have, as well as the alliance’s intention to trade in currencies other than the dollar, which is a process known as de-dollarization.
In a post on Truth Social, President Trump stated, “We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar. If they do not comply with this commitment, they will face 100% Tariffs, and they should expect to say goodbye to selling into the wonderful U.S. Economy.”
In October, Russian President Vladimir Putin made the accusation that the United States was “weaponizing” the dollar and branded it as a “big mistake.” This accusation was made during a conference of the BRIC nations.
During that same period, Putin made the statement, “It is not us who refuse to use the dollar.” However, if they do not permit us to work, what options do we have? We have no choice except to conduct a search for other options.
Specifically, Russia has been advocating for the establishment of a new payment system that would provide an alternative to the global financial messaging network known as SWIFT. This would enable Moscow to circumvent Western sanctions and engage in trade with partners and other nations.
According to Trump, there is “no chance” that the BRIC countries will completely replace the United States dollar in international trade, and any nation that attempts to make this happen “should wave goodbye to America.”
The role of the United States dollar as the principal reserve currency on the global market is not expected to be threatened in the foreseeable future, according to research.
According to a model developed by the Atlantic Council, which evaluates the position of the dollar as the principal global reserve currency, the dollar is “secure in the near and medium term” and continues to dominate other currencies.
The most recent tariff threat that President Trump has made comes after he threatened to impose tariffs of 25% on all goods imported from Mexico and Canada, as well as an additional 10% tax on goods imported from China, in an effort to coerce these countries into taking greater measures to curb the flow of illegal immigration and drugs into the United States.
Since then, he has had a conversation with the President of Mexico, Claudia Sheinbaum, who stated on Thursday that she is convinced that a trade war with the United States can be avoided. Justin Trudeau, the Prime Minister of Canada, returned home on Saturday after meeting with Donald Trump. However, he did not receive any assurances that the president-elect will reduce the tariffs that have been imposed on Canada.
Source : CNBC news
