US President-elect Donald Trump recently threatened BRICS countries with “100% tariffs” if they pursue their own currency or alternatives to the US dollar. However, economists say this may be an overestimation of the group’s intentions and could potentially hurt the dollar’s status.
The BRICs (Brazil, Russia, India, and China) alliance was formed in 2009, aiming to discuss common issues among its member countries. Over time, South Africa joined the group. Economists Jim O’Neill and Brad Setser say that while some members have been forced to seek alternatives to the US dollar due to sanctions on Russia, others may not be willing to surrender control over their monetary policies.
China remains the dominant economy in the group, accounting for more than 70% of its total. However, there has been limited progress toward creating a shared currency among BRICS countries. Trump’s recent tweet about the group seems to have given them a boost in efforts to create their own currency.
Some experts argue that the idea of “dedollarization” – reducing the dollar’s share of international currency reserves and limiting its use in global trade – is gaining traction, particularly from China and Russia. However, it’s still unclear whether BRICS countries will truly leave the dollar as Trump claims.
In reality, creating a shared currency among BRICS countries may be more complex than anticipated. Economists highlight potential conflicts between member nations, such as differences in oil importation patterns, which could complicate how a shared currency would function.
Setser notes that reserve status has helped keep the US dollar strong for years but warns that Trump’s tariffs could reduce demand for dollars and encourage countries to diversify away from the greenback. A weaker dollar might boost US domestic manufacturing, but it also risks undermining confidence in the dollar if seen as a forced move due to retaliation.
The idea of creating a national bitcoin is another area of concern, with some experts warning that the US hasn’t been paying close enough attention to the slow but steady impact of dedollarization.
Source: https://www.marketwatch.com/story/what-are-the-brics-countries-and-are-they-really-trying-to-leave-the-dollar-like-trump-says-71a2545f