Trump Fears BRICS Might, Waves 100% Tariff Threats

Newly-appointed US President Donald Trump's continuous threats to BRICS countries, warning them to hold back their de-dollarisation efforts is a desperate bid to make sure that the dollar's dominance in the international financial system is maintained, economists have told Sputnik India.

Trump's repeated warnings to BRICS countries, including India, are a part of his larger agenda of 'Making America Great Again' or MAGA as it is called by his supporters in the US, according to Dr Biswajit Dhar, a former professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University (JNU) and acting president of the Council for Social Development.

Among the things Trump wants to pursue with intent and dedication is to ensure that the hegemony of the dollar isn't compromised, Dhar told Sputnik India.

"Last year, an International Monetary Fund [IMF] report confirmed that the US currency had ceded ground to other currencies on the international exchange, with the share of the American greenback coming down to 57.4% in global reserves, a sharp decline from its near complete dominance 25 years ago when it contributed 71% to the world's foreign currency," the academic stressed.

Dhar highlighted that Trump's threats to BRICS nations are driven by a desire to maintain the dollar's status as the world's leading currency.

Also, there have been indications that China is gaining ground at the expense of the US in terms of UN-denominated trade and Trump is trying to scoff at all those moves that are aimed at reducing the importance of the American dollar in the international economy, the financial expert stated.

"One must note that BRICS countries like India and Russia have promoted trade in national currencies in their efforts to reduce their dependence on the US dollar, a key factor in America's domination of global financial institutions. India, in particular, is going all out to internationalise the Rupee" the analyst assessed, adding that Trump aims to challenge nations keen to move away from the dollar in international transactions.

Before BRICS expansion in 2024, the grouping accounted for 18% of global trade and 25% of global GDP, with these figures set to rise significantly, as Iran, UAE, Ethiopia, Egypt, Saudi Arabia, and Indonesia (following suit earlier this month) joined the bloc, Dr Debashis Chakraborty, a professor of economics at the Kolkata campus of the Indian Institute of Foreign Trade (IIFT), highlighted in an interview with Sputnik India.

He stressed that if all these countries trade in national currencies, "the dollar's clout as a reserve currency" will shrink significantly, something Trump, especially at the start of his second term, is unlikely to accept isn't willing.

"Also, if there is no dollar transaction between the BRICS nations, it may cause a major capital outflow from America, which wouldn't be liked by President Trump or US economic policymakers. While there are aspersions that he may not impose such harsh measures immediately, his end goal is to ensure that BRICS countries do not initiate concrete steps towards de-dollarisation, at least, not during his four years in office," Chakraborty underscored.

Trump must be aware that imposing tariffs is likely to drive up the prices of domestic products in the US, a move that could face American public disapproval, he cautioned.

Hence, a weakened dollar and tariffs would pose a double whammy for US citizens the analyst asserted. For this reason, Trump is using all measures – threats and warnings – to prevent BRICS nations from pursuing trade in local currencies, as it would have a profound impact on the dollar’s global status, the observer concluded.

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