By Talha Yavuz
Donald Trump has never shied away from wielding tariffs as a political weapon, and his second term appears no different.
On his first day back in office, Trump reaffirmed his tough stance by threatening to slap a 100 percent tariff on any BRICS nation that continues its de-dollarisation push.
Trump 2.0 has already started to announce the upcoming tariffs as 25 percent on Mexico, 25 percent on Canada and 10 percent on China and has promised that more on the way.
While he is gearing up for yet another trade war, can Washington afford an economic showdown with a bloc representing nearly half of the world’s population?
And if Trump follows through, how will the BRICS nations perform under pressure?
Dollar as reserve currency
For decades, the US dollar has served as the backbone of global trade, a dominance reinforced by the Bretton Woods system and America’s economic influence.
During the 20th century, the British pound played this role. However, following World War II, Britain’s economic downturn and war debts resulted in the US dollar becoming the primary global reserve currency.
Washington has not hesitated to leverage this power as a geopolitical tool.
Russia learned this the hard way when, following its invasion of Ukraine, the US froze hundreds of billions in Russian assets, imposed sanctions, and largely removed Moscow from the global financial network.
Why Trump’s threat to punish BRICS+ over de-dollarisation is premature
Similarly, during the Brunson crisis, Türkiye faced economic pressure as well, highlighting how Washington employs financial mechanisms as leverage against geopolitical rivals.
Tools such as sanctions, tariffs, the SWIFT system, and dollar hegemony can be weaponised at any time by the US.
Aside from specific incidents in the BRICS bloc, the Russia-Ukraine war served as a wake-up call for many nations, reminding them of their dependence on the dollar.
In recent years, several countries have taken steps to reduce their reliance on the US dollar.
For instance, China and Brazil now trade in their local currencies bypassing the dollar. India and Malaysia have signed an accord to increase rupee-based cross-border transactions.
Bank Indonesia (BI) has reduced its dependence on the US dollar by forging a partnership with the Reserve Bank of India (RBI). Both central banks have agreed to promote the use of local currencies in transactions.
Even France, a long-standing US ally, has settled energy transactions in yuan. Additionally, South Korea and Indonesia recently signed an agreement to facilitate direct exchanges between the won and rupiah.
Additionally, Russia and China had already been bypassing the dollar for years.
Since 2019, Moscow and Ankara have had an agreement in place to enhance the use of local currencies in their bilateral trade.
Economic club or geopolitical counterweight?
With its members accounting for nearly 30 percent of global GDP and a third of global oil production, BRICS is increasingly seen as a counterweight to Western-led institutions.
Initially formed in 2006 as BRIC—Brazil, Russia, India, and China—the bloc expanded in 2010 with South Africa’s inclusion, later adding Indonesia, and more recently, Iran, the UAE, Egypt and Ethiopia.
Türkiye has also been interested in the alliance and has become a “partner country” along with Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, Uzbekistan and Vietnam.
In 2014, BRICS launched the New Development Bank to finance infrastructure projects, and discussions have surfaced about a common trade currency—though no concrete steps have yet been taken.
BRICS is viewed by many as a potential alternative to G7-led institutions.
Yet, despite its ambitions, BRICS faces a crucial test: How will it respond to Trump’s aggressive tariff threats?
Russia, largely severed from US markets due to sanctions, may remain unaffected.
China, despite taking lessons from trade wars during Trump’s first term, is more independent than before. However, it appears to be still the most vulnerable to Trump’s aggressive trade policies in the bloc.
The US is by far China’s biggest trade partner. Bilateral trade between the two countries was $574 billion in 2023, with $279 billion in favour of China.
A significant portion of China’s exports consists of phones, computer accessories, electrical appliances, footwear, cookware, and industrial equipment.
India, too, could face significant repercussions, as the trade deficit hovered around $43 billion in favour of India, while total trade volume was $124 billion in 2023.
A substantial portion of India’s exports consists of pearls, precious stones-metals, electrical, electronic equipment, pharmaceutical products and mineral fuels.
Having said that, Trump’s tariffs will trigger retaliation that could push up prices for American consumers.
A defining moment
Even without US intervention, a BRICS currency is unlikely to gain traction.
A global reserve currency requires a stable home base, much like English became the world’s lingua franca while Esperanto faded into obscurity.
The IMF’s Special Drawing Right (SDR), a synthetic currency based on a basket of major currencies, has failed to achieve widespread adoption precisely because it lacks a single, trusted issuer.
If a BRICS unit were to compete with the dollar, member states would need to relinquish their national currencies, forming a monetary union under a unified central bank—a political and economic challenge of enormous proportions.
The fundamental obstacle is that the BRICS economies are too disparate for such a union to function effectively.
Successful monetary blocs, like the eurozone, typically emerge among closely integrated economies with similar business cycles, deep trade ties, and relatively fluid labour markets.
BRICS, by contrast, consists of economies as divergent as China and South Africa, India and Russia—each with distinct monetary policies, economic structures, and political priorities.
In such a setting, a shared currency could create severe imbalances, where one economy overheats while another slips into recession, with no ability to adjust interest rates or exchange rates independently.
Without robust alternative mechanisms—such as cross-border labour mobility or a strong political framework—these disparities would lead to discord rather than stability.
Trump may see BRICS as a challenge to dollar hegemony, but the bloc’s own internal contradictions are its biggest hurdle.
BRICS+ nations are spread across four continents, speak different languages, and often have historically contentious borders, as seen in the China-India military standoff.
Their economies follow divergent business cycles—rising energy prices benefit oil exporters like Russia and Brazil but strain importers like China and India—making a unified monetary policy impractical and reducing the likelihood of a viable BRICS currency.
Trump’s ultimatum is more than a trade dispute—it is a litmus test for BRICS unity.
Should they stand firm, BRICS could emerge stronger, accelerating its push for financial mechanisms that may sidestep Western dominance.
While the US dollar is unlikely to be dethroned overnight, Trump’s hostile approach may accelerate efforts by BRICS nations to develop alternative financial systems for de-dollarisation.
The author, Talha Yavuz, is former Kiev correspondent of Anadolu Agency and presently affiliated with the Global News Planning Department of AA.
Disclaimer: The views expressed by the authors do not necessarily reflect the opinions, viewpoints and editorial policies of TRT Afrika.
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