Trump’s threat of 100% tariffs if BRICS nations adopt common currency unrealistic: GTRI
US President-elect Donald Trump’s latest tariff threat directed towards the BRICS nations, including India, warning against the proposed adoption of a BRICS common currency, is unrealistic and more symbolic than practical, according to research body Global Trade and Research Initiative (GTRI).
The threatened imposition of 100 per cent tariffs would harm US consumers by raising prices of imports, disrupt global trade and risk retaliation from key trading partners, it said in a report shared on Sunday.
“The global shift away from the US dollar is a complex process driven by economic diversification, not easily deterred by threats. Such rhetoric ignores the interdependence of global economies and oversimplifies the challenges in enforcing such drastic measures,” the GTRI report added.
- Also read: India bracing for Trump’s tariff storm by weighing duty cut options
The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is over, Trump said on Saturday in a post on Truth Social, a social media platform owned by him.
“We require a commitment from these countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty US dollar or, they will face 100 per cent tariffs, and should expect to say goodbye to selling into the wonderful US economy,” he posted.
The BRICS grouping, which includes Brazil, Russia, India, China, South Africa and the recently inducted Iran, Egypt, Ethiopia, and the United Arab Emirates, were not yet considering a BRICS currency and it was a long-term prospect, Russian President Vladimir Putin had said in a press meet prior to the 16th annual BRICS summit in Kazan in October.
Putin had added that the BRICS focus should be on the use of their national currencies, new financial instruments and the creation of an analogue of SWIFT.
During an an interaction with Washington-based thinktank Carnegie Endowment for International Peace, External Affairs Minister S Jaishankar had clarified in October that India was not for de-dollarisation but as US policies often complicated trade with certain countries, it sought “workarounds” with no intentions of moving away from dollar usage.
However, a multipolar world will eventually be reflected in currencies and economic dealings, he added.
For India, the prudent approach is to focus on making local currency trading workable by establishing a transparent and open currency exchange, the GTRI report noted.
“India’s best interests lie neither in the domination of the US dollar nor in fully adopting a BRICS currency at this stage. By enhancing its own financial infrastructure, India can better navigate the shifting dynamics of global trade,” said Ajay Srivastava, trade expert and founder of GTRI.
While the US dollar, which accounts for over 90 per cent of transitions world wide, dominates global trade, it is not the only currency used internationally. Other convertible currencies like the Japanese yen, the euro, and the British pound are also integral to global commerce, and the United States has not objected to their use, the report stated.
“The proposed BRICS currency is simply an extension of these existing alternatives, aiming to facilitate trade among member countries and reduce over-reliance on a single currency,” it added.
