President-elect Donald Trump has once again shown his knack for turning complex global financial systems into personal political games. This time, he declared war on the BRICS nations (Brazil, Russia, India, China, and South Africa), demanding they “pledge allegiance” to the US dollar and abandon any ideas of creating a rival currency. If not, he threatens to slam them with a staggering 100% tariff on their exports to the United States.
It’s vintage Trump: a mix of bravado, economic ignorance, and reckless threats. While he has long made clear his intent to preserve the dollar’s dominance, this latest salvo represents a dramatic escalation as he prepares to take office in January.
Trump’s team has reportedly been brainstorming punitive measures to punish nations daring to trade outside the dollar. Options include export controls, currency manipulation fees, and trade taxes—an arsenal that could ignite a global trade war of unprecedented proportions.
In theory, Trump wants to preserve the dollar’s status as a global reserve currency. In practice, his policy approach reveals a dangerous misunderstanding of economic realities. The US cannot simultaneously reduce its trade deficit and increase the dollar’s global dominance. These goals are diametrically opposed.
The BRICS bloc, recently expanded to include Iran, the UAE, Ethiopia, and Egypt, has discussed alternatives to the dollar for years. The movement gained momentum after the US-led sanctions against Russia in 2022, which froze Russian assets and weaponised the dollar system. However, despite all the rhetoric, the infrastructure supporting the dollar—like its cross-border payment systems—still provides it with a decisive edge—at least for the moment, but things are moving quickly.
Trump’s aggressive dollar diplomacy also highlights a troubling precedent: freezing Russian foreign assets. By turning the dollar into a political weapon, the US risks accelerating the de-dollarisation it seeks to prevent. Nations wary of becoming the next target of sanctions may double down on alternative financial systems, undermining the dollar’s role over the long term.
Trump’s grandstanding poses significant risks to the dollar’s position. Threats and tariffs to push nations away from the dollar could backfire significantly if the BRICS nations or others accelerate efforts to bypass it. This would weaken the US’s financial leverage and destabilise global trade systems built on the dollar’s predictability.
Moreover, Trump’s proposed 100% tariffs would fuel the inflationary fire. Higher import costs could send consumer prices soaring, negating any short-term revenue gains and further eroding American households’ purchasing power.
While Trump insists his tariffs are a way to “protect America,” they seem more like a recipe for economic self-sabotage. His “America First” rhetoric ignores the interconnected nature of modern trade. Forcing allies and adversaries into submission through economic bullying might win headlines, but it risks long-term damage to US global leadership.
If Trump pursues his threats, he may secure a fleeting show of power at the expense of global economic stability. The dollar may remain dominant in the short term, but the policies Trump claims protect it could sow the seeds of its eventual decline.
As always, Trump’s playbook prioritises spectacle over substance, leaving both allies and adversaries scratching their heads and the world bracing for the fallout.