U.S. President-elect Donald Trump has issued a stark warning to nations contemplating the establishment of a new BRICS currency, suggesting a potential retaliatory stance involving "100 percent tariffs" against countries that undermine the U.S. dollar. This statement was made via a post on Truth Social on December 2, 2024, following discussions among BRICS nations—Brazil, Russia, India, China, and South Africa—about increasing non-dollar transactions.
Despite Trump's claims, the dominance of the U.S. dollar remains robust, comprising 58 percent of global foreign exchange reserves, although this is a decline from 67 percent in 2000. The dollar also accounts for 74 percent of export invoices in the Asia-Pacific region, underscoring its critical role in international trade.
Trump's comments emerged in the context of a recent BRICS summit in Kazan, Russia, where member states explored enhancing local currencies in trade to reduce reliance on the dollar. The discussions come amid heightened geopolitical tensions, particularly following Western sanctions on Russia due to its invasion of Ukraine.
While some analysts suggest that the BRICS nations could be at a pivotal moment akin to Europe's in the 1970s, the creation of a unified BRICS currency remains speculative. Current transactions between member states predominantly utilize their respective national currencies, with no official plans for a shared currency or monetary union.
Market reactions have been notable, with the U.S. dollar strengthening in response to Trump's remarks. Concurrently, currencies such as the euro, yuan, rupee, and rand have experienced depreciation against the dollar. Analysts warn that a strong dollar may compel other countries to raise interest rates to mitigate capital flight risks.
In related financial developments, Brent crude prices rose by approximately 0.4 percent to $72.04 per barrel amid geopolitical tensions in the Middle East and expectations of a potential interest rate cut by the Federal Reserve, which could influence the dollar's value and global oil demand.