President-elect Donald Trump has threatened to impose a 100% tariff on BRICS nations if they pursue creating a new currency to challenge the U.S. dollar. This declaration was made via Trump’s social media platform, Truth Social, where he explicitly stated that these countries must commit to not creating a new BRICS currency or supporting any other currency to replace the U.S. dollar, or they would face severe economic repercussions including the loss of access to the U.S. market. Trump’s statement underscores a policy to maintain the dollar’s global financial dominance.

BRICS Summit Outcome:

The recent BRICS summit, held in Kazan, Russia, in October, focused on reducing dependency on the U.S. dollar through various strategies. Here are the key points:

Currency Strategy: Discussions centered around enhancing trade using local currencies rather than immediately establishing a common BRICS currency. Russian President Vladimir Putin emphasized that while there was no immediate plan for a unified currency, steps were being taken to explore and expand the use of national currencies for trade among member countries.

Payment Systems: There was talk of developing alternative payment systems, like a blockchain-based international payments system proposed by Putin, to circumvent Western sanctions and reduce reliance on the SWIFT network.

De-dollarization: The summit acknowledged the need for de-dollarization but highlighted the complexities due to economic, political, and geopolitical variances among the BRICS nations.

BRICS Countries:

Brazil

Impact: Brazil’s economy, heavily reliant on exports like coffee and soybeans to the U.S., could face significant disruption with a 100% tariff, potentially driving up costs for U.S. consumers and affecting Brazil’s trade balance.

Russia

Impact: With ongoing tensions with the West, Russia has been actively seeking to move away from dollar transactions, especially post-sanctions. A tariff would further push Russia towards alternative trade arrangements but might also hinder its export capabilities to the U.S.

India

Impact: India, with a burgeoning economy, has been cautious about de-dollarization, valuing its trade relationship with the U.S. High tariffs could affect sectors like pharmaceuticals and IT services, though India’s diverse export portfolio might mitigate some impacts.

China

Impact: As a major player in global trade, China could face considerable challenges if barred from U.S. markets with such tariffs, potentially affecting its massive export sector. However, China has been actively promoting the use of the yuan internationally.

South Africa

Impact: South Africa’s economy, particularly its mining sector, could suffer from reduced access to U.S. markets, though this could accelerate efforts towards African and intra-BRICS trade in local currencies.

Egypt

Impact: Egypt, seeking to mitigate economic vulnerabilities, might see increased pressure on its currency and economy, pushing it towards more regional trade solutions.

Ethiopia

Impact: With an economy in transformation, Ethiopia could find its growth trajectory hampered, though the impact might be less direct due to less immediate U.S. trade exposure.

Iran

Impact: Already under significant U.S. sanctions, Iran’s trade with the U.S. is minimal, but further isolation could drive stronger economic ties within BRICS.

United Arab Emirates (UAE)

Impact: The UAE, with its strategic economic position, could see a shift towards more regional trade and currency use, although its strong trade ties with the U.S. make this a complex scenario.

Impact on International Trade:

Inflation: Increased tariffs would likely lead to higher prices for U.S. consumers for goods from BRICS nations, potentially fueling inflation.

Trade Diversification: BRICS countries might expedite plans for alternative trade mechanisms, possibly leading to new economic blocs or agreements that bypass traditional dollar-based trade.

Global Currency Dynamics: While the immediate threat to the U.S. dollar’s dominance is low, these developments could encourage a long-term shift towards multi-currency trade systems, affecting the dollar’s role as the world’s reserve currency.

Geopolitical Shifts: This could lead to a reorientation of geopolitical alliances and economic partnerships, particularly if BRICS countries strengthen their economic ties in response to U.S. policy.

These updates reflect the current landscape as of early December 2024, based on available information from web sources and social media posts. The current scenario reflects a complex interplay of economic strategy, geopolitical signaling, and the ongoing debate on the sustainability and ethics of using the dollar as the primary global reserve currency. However, the actual implementation of such tariffs would depend on further developments in U.S. policy once Trump assumes office in January 2025.