To understand the seriousness of these threats and the potential impact on the economies of countries if Trump takes this step, read the overview by journalist RBK-Ukraine Alik Sakhn. This information is reported by Kontrakty.UA.
BRICS is an intergovernmental organization founded in 2009. Initially, it included Brazil, Russia, India, and China, but later six more countries joined the group. The total gross domestic product of all member countries accounts for over a quarter of the world's GDP, with China holding the largest share. The group represents nearly half of the world's population and is considered an equivalent to the G7.
Why Trump has started threatening high tariffs
On Thursday, January 30, U.S. President Donald Trump again threatened to impose 100% tariffs on BRICS countries if they attempt to replace the U.S. dollar as the reserve currency. This came just before his decision to impose 25% tariffs on goods from Canada and Mexico.
"The idea that BRICS countries are trying to abandon the dollar while we sit back and watch is over. We will demand that these seemingly hostile countries commit to not creating a new BRICS currency and not supporting any other currency to replace the mighty U.S. dollar. Otherwise, they will face 100% tariffs and must say goodbye to the opportunity to sell their products in the great U.S. economy," – wrote Trump on his social network, Truth Social, and reiterated the next day on X.
BRICS countries officially discussed abandoning the U.S. dollar for the first time in 2014. At the BRICS summit in Fortaleza (Brazil), the establishment of the New Development Bank (NDB) was announced, which was intended to serve as an alternative to the World Bank and the International Monetary Fund.
This decision was made against the backdrop of increasing political tension, particularly following the imposition of sanctions on Russia due to the annexation of Crimea in 2014. This situation pushed BRICS countries to seek mechanisms that would reduce their dependence on the U.S. dollar and Western financial institutions.
The last time statements were made about the intention to abandon the use of the U.S. dollar and create their own currency was at the summit in Kazan, Russia, at the end of October 2024. Responding to this, in November Trump published a nearly identical message: "The idea that BRICS countries are trying to abandon the dollar while we stand by and watch is over."
Is the abandonment of the dollar by BRICS countries realistic?
Serhiy Fursa, Deputy Director for Securities Trading at the investment company Dragon Capital, believes that Trump has won without a fight, as BRICS countries will not create their own currency.
"BRICS countries themselves have abandoned this idea because it is fundamentally unfeasible. Trump's relationship with China is a separate story that dates back to his first term when the trade war began, tariffs were raised, and this is being discussed now. Regarding whether such moves on his part could also impact the U.S. economy? Absolutely, they will. In any case, imposing tariffs leads to accelerated inflation, which is destructive for any economy, including the American one," – Fursa notes.
Financial analyst Andriy Shevchishin also shares the view that it is impractical for BRICS countries to create their own currency. The strength of this bloc currently lies in one key player – China. Therefore, according to Shevchishin, it would be more appropriate to focus on increasing the use of the Chinese yuan in transactions between countries rather than creating a new currency.
"The yuan has a significant drawback – its exchange rate is effectively controlled by the Central Bank, which maintains it at a fixed level. They can change the rate at any moment, and this does not raise many questions. Of course, many countries use the yuan, and China actively promotes its projects in Latin America, the Middle East, Africa, and Asia, encouraging cooperation with this currency. The yuan indeed ranks third among currencies globally in terms of usage, after the dollar and the euro, although its share is gradually decreasing," – explains Shevchishin in a comment to RBK-Ukraine.
He adds that even if Trump decided to impose 100% tariffs, it is unclear how the burden of these tariffs would be distributed among BRICS member countries. If based on GDP, then in that case, China would be the most affected.
"China can implement its policy through its national yuan, not through another currency. Therefore, in my opinion, we are unlikely to see a BRICS currency. If this does not happen, then it is probably just a strategic move that allows BRICS countries to continue discussions and negotiations, particularly with China," – notes Shevchishin.
Regarding the lack of plans to introduce a common currency, Indian parliament member Shashi Tharoor has already stated that "there are no plans to introduce an alternative to the U.S. dollar." Additionally, Kremlin spokesman Dmitry Peskov mentioned that BRICS countries are only discussing the creation of joint investment platforms.
The importance of the dollar in the global economy
After World War II, the dollar replaced the pound sterling as the world's reserve currency, and today it accounts for more than half of the world's currency reserves. This has made the dollar a symbol of the financial and political dominance of the United States in the world.
"Abandoning the dollar is extremely dangerous for the U.S. because the Bretton Woods Agreement effectively transitioned the world to a dollar-based system. Debts, financial ties, and much more are tied to the dollar. Most countries hold their reserves in dollar-denominated assets, as the U.S. financial market is the largest in the world and offers numerous investment opportunities," – says financial analyst Andriy Shevchishin.
He clarifies that if the dollar loses its position, it would threaten the U.S.'s ability to manage its debt burden. According to him, last year, servicing the U.S. debt cost around $1 trillion.
"This is a significant amount, and managing it will become challenging if the U.S. loses control of the dollar. They are raising funds through new loans, but what if the dollar weakens? Therefore, Trump insists on lowering the Fed's rate, which could stimulate the economy and lending, but it would also decrease the value of debts," – Shevchishin adds.
The Federal Reserve estimates that from 1999 to 2019, the dollar accounted for 96% of international trade transactions in America, 74% in Asia, and 79% in other parts of the world. Globally, banks used dollars for about 60% of their deposits and loans. Today, the dollar is involved in nearly 90% of all transactions in the currency market.
As a reminder, Thailand accepted Russia's invitation to become a BRICS partner. The invitation occurred last fall when Russia was chairing BRICS. By the end of the year, Thailand considered this invitation.