Should Brics worry about Trump’s threat?
Subscribe to enjoy similar stories. The president-elect of the US, Donald Trump, has threatened the Brics nations with 100% tariffs should they create their separate currency or back any other currency in their attempt to move away from the dollar.
The threat has come amid heightened expectations of trade wars, especially with China, and has sparked widespread nervousness over disruptions to global trade and supply chains. While Trump’s muscle-flexing over the dollar cannot be ignored, experts believe such an action is unlikely to be taken by the US for two reasons: first, a Brics currency is nowhere on the horizon and second, tariffs might end up hurting the US as the world’s largest economy runs major trade deficits with major nations in the Brics group.
“A common Brics currency is a long shot given the group comprises a very heterogeneous mix of countries at different stages of economic development and contrasting geopolitical preferences," said Abhishek Upadhyay, economist at ICICI Securities PD. “It is difficult to treat the threat as credible at this stage." However, Trump’s threat is not completely unfounded.
The Brics, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the UAE and is generally considered an alternative to Western dominance, did affirm their effort last month to establish an alternative payment system to reduce reliance on the dollar. Several nations, including India, have had a non-commital stance towards a common Brics currency so far.
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