While issuing a warning to countries going in for de-dollarisation and a BRICS currency — via a social media post on January 30, 2025, US President Donald Trump said:
“. They can go find another sucker Nation. There is no chance that BRICS will replace the US Dollar in International Trade, or anywhere else, and any Country that tries should say hello to Tariffs, and goodbye to America!”
Trump had already announced tariffs against Mexico, Canada and China which were supposed to come into force on February 4, 2025. As of now, tariffs against Mexico and Canada have been put on hold — for 30 days — after Mexico and Canada agreed to stricter border security and addressing US concerns on drug trafficking. China however has responded to Trump’s tariffs. 15% import tax will be placed on US coal and liquefied natural gas from February 10, 2025. Apart from this, several US imports — crude oil, agricultural machinery, pickup trucks and large-engine cars — will face a 10% tariff. China also launched an enquiry against google for violating anti-monopoly laws. Beijing also announced strong measures against other US businesses as well.
Trump’s warning to countries trading in non-dollar currencies
While currently all eyes are on the new round of trade wars which have begun under Trump 2.0. It remains to be seen as to whether the US President can follow up on his threats against BRICS countries. A few points need to be borne in mind:
First, with the recent entry of Indonesia into the BRICS grouping, the organisation now accounts for 40% of the world economy and nearly half of the global population. At the previous summit held in Kazan (Russia), in October 2024, China’s President Xi Jinping had said:
“We must make full use of this summit, maintain the momentum of Brics, and consider and devise our strategy to address issues that have a global impact.”
Second, trade in local currencies has gained momentum after the imposition of sanctions on Russia in the aftermath of Russia-Ukraine war. Several of the countries which have been carrying out trade in local currencies share close ties with the US and have been trading in local currencies to circumvent US sanctions on Russia. Prominent examples of the same are India and UAE.
During Indonesian President, Prabowo Subianto’s state visit to India — last month — both sides had agreed to give a fillip to trade in local currencies. Here it would be pertinent to point out, that India is also exploring the possibility of trade in local currencies with several other countries.
Third, countries like India have supported trade in local currencies but categorically ruled out the possibility of a BRICS currency. After Trump’s recent warning, India’s External Affairs Ministry reiterated the point that:
“On de-dollarisation, the External Affairs Minister has made it clear that we don’t have any policy or strategy in this regard,”
Senior Indian officials have made this point on more than one occasion.
After Trump’s warning to BRICS countries, Kremlin spokesman Dmitry Peskov said:
“There are no talks about establishing a common BRICS currency. Such discussions have not taken place and are not taking place now. Instead, BRICS is focused on developing new joint investment platforms to facilitate mutual investments and projects in third countries,”
Finally, for China and Russia the weakening of a US dollar is linked to their long-term strategic objectives for others such as India, exploring the non-dollar trade option is linked to their economic interests as mentioned earlier.
Conclusion
Trump’s recent warning to countries going in for de-dollarisation is linked to his “America First strategy”. Action against countries trading in local currencies will not be easy and individuals within his team may advise him against the same. Washington also needs to understand that several countries have opted for trade in local currencies, due to the imposition of sanctions on Russia. If these sanctions are removed or even relaxed, several countries may avoid trade in local currencies. Apart from several other reasons, one of the key factors why several countries are eagerly waiting for a solution to the Russia-Ukraine conflict is the complication of economic linkages with Russia due to the stringent sanctions imposed by Washington. While Trump may be able to successfully use tariffs as a bargaining chip — on trade issues — vis-à-vis some individual countries, it will be tougher to stop countries from non-dollar trade in the current geopolitical landscape. As for a BRICS currency, as of now it seems far-fetched if not impossible in any case — given the lack of enthusiasm of several members regarding the idea.
