Dec
On Saturday, President-elect Donald Trump threatens BRICS group of emerging nations, to impose 100% tariffs if they attempt to weaken the U.S. dollar. The message, posted on his Truth Social platform, appears to be a response to efforts by BRICS to challenge or replace the dollar as the dominant global reserve currency.
BRICS Alliance and Expansion
The BRICS alliance, originally formed by Brazil, Russia, India, and China, now includes five additional nations. These nations are South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates. As a result, BRICS nations collectively represent 45% of the global population. Consequently, their influence in global affairs continues to grow.
Trump’s Firm Stance on the Dollar
Trump’s remarks on Saturday were unequivocal: “The idea that BRICS countries are trying to move away from the dollar while we sit idly by is over.” He further emphasized, “We demand a commitment from these countries that they will not create a new BRICS currency or back any other currency to replace the mighty U.S. dollar, or they will face 100% tariffs and will have to say goodbye to selling in the wonderful U.S. economy. They can go find another ‘fool’!”
Putin’s Criticism of U.S. Dollar
At the BRICS summit in October, Russian President Vladimir Putin accused the U.S. of “weaponizing” the dollar. He called it a “great mistake.” However, despite these accusations, Trump remains adamant that the dollar will not be replaced. Furthermore, he insists that the U.S. economy will maintain its strength. In contrast, Putin’s criticism reflects concerns over the dollar’s dominance in global trade.
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The Role of Tariffs in U.S. Economic Strategy
Tariffs, essentially taxes on imported goods, are paid by importers, not the countries of origin. The additional costs are usually passed on to consumers. Trump’s repeated threats to impose large-scale tariffs have sparked concerns among U.S. consumers and major trading partners alike.
Trump views tariffs as a tool to boost the U.S. economy, claiming they could generate trillions of dollars in government revenue. He has proposed a 10%-20% tariff on the $3 trillion worth of imported products annually, with a 60% rate on goods from China.
Potential Economic Consequences
Some experts warn that such tariffs could increase inflation and slow U.S. economic growth. Goldman Sachs, one of the largest investment banks in the U.S., cautioned in September that Trump’s plan could raise inflation by as much as 1.2% in 2025.
Historical Impact of Trump’s Tariffs
In 2018, Trump imposed tariffs on $380 billion worth of imported goods. He claimed foreign countries would bear the cost. A National Bureau of Economic Research study showed domestic consumers bore the full cost of the tariff. The Federal Reserve Bank of New York revealed that Trump’s tariffs cost average households $831 annually.
Recent Proposals on Tariffs and Foreign Relations
Last Monday, Trump proposed imposing tariffs on three of Washington’s top trade partners. Specifically, he demanded cooperation on fentanyl and illegal immigration. In addition, Trump vowed a 25% tariff on Mexico and Canada. He also promised a 10% tariff on China. Ultimately, these tariffs depend on the countries’ cooperation with the U.S. on critical issues.
No Resolution on Tariff Threats
The three leaders involved in discussions described the talks as productive. No details were provided about the discussions. Canadian Prime Minister Justin Trudeau returned home on Saturday. He did not receive assurances that Trump would back down. Trump’s tariff threats against U.S. trade partners remain unresolved.
Trump’s threat to impose 100% tariffs on BRICS nations reflects growing tensions over their efforts to challenge the U.S. dollar, according to wsj subscription.
