US President Warns BRICS Countries Against Replacing US Dollar as Reserve Currency
Washington, D.C.
US President Donald Trump has warned BRICS member countries against replacing the US dollar as a reserve currency, threatening to impose 100% tariffs on any country that attempts to do so. Trump made the statement on Truth Social, nearly identical to one he posted on November 30.
“We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty US dollar or, they will face 100% tariffs,” Trump said.
The BRICS Grouping
The BRICS grouping includes Brazil, Russia, India, China, and South Africa, and a few other countries that joined in the past couple of years. The grouping does not have a common currency, but long-running discussions on the subject have gained some momentum after the West imposed sanctions on Russia over the war in Ukraine.
Dollar Dominance
Dollar dominance, or the outsized role of the US dollar in the world economy, has strengthened of late, thanks to the robust US economy, tighter monetary policy, and heightened geopolitical risks. Even as economic fragmentation has boosted a push by BRICS countries to shift away from the dollar into other currencies, the US dollar remains the world’s primary reserve currency.
A Study by the Atlantic Council’s GeoEconomics Center
A study by the Atlantic Council’s GeoEconomics Center last year showed that the US dollar remains the world’s primary reserve currency, and neither the euro nor the so-called BRICS countries have been able to reduce global reliance on the dollar.
The History of the BRICS Grouping
The acronym BRIC, which did not initially include South Africa, was coined in 2001 by then Goldman Sachs chief economist Jim O’Neill in a research paper that underlined the growth potential of Brazil, Russia, India, and China. The bloc was founded as an informal club in 2009 to provide a platform for its members to challenge a world order dominated by the US and its Western allies. South Africa was the first beneficiary of an expansion of the bloc in 2010 when the grouping became known as BRICS. The group added Egypt, Ethiopia, Iran, and the United Arab Emirates in 2023, and Indonesia became a member earlier this month.
Conclusion
In conclusion, President Trump’s warning to BRICS countries highlights the importance of the US dollar in the global economy. While the BRICS grouping has been pushing for a shift away from the dollar, it remains to be seen whether they will be able to succeed in their efforts.
FAQs
Q: What is the BRICS grouping?
A: The BRICS grouping includes Brazil, Russia, India, China, and South Africa, and a few other countries that joined in the past couple of years.
Q: What is the purpose of the BRICS grouping?
A: The BRICS grouping was founded as an informal club in 2009 to provide a platform for its members to challenge a world order dominated by the US and its Western allies.
Q: Has the BRICS grouping been successful in its efforts to challenge the US dollar?
A: While the BRICS grouping has been pushing for a shift away from the dollar, it remains to be seen whether they will be able to succeed in their efforts.
Q: What is the significance of the US dollar in the global economy?
A: The US dollar remains the world’s primary reserve currency, and its dominance has strengthened of late due to the robust US economy, tighter monetary policy, and heightened geopolitical risks.