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US President Donald Trump has fired yet another “tariffs” weapon at BRICS. POTUS has reaffirmed his stance about de-dollarization, saying that if their nations do not maintain the dollar’s role in global trade, he will impose 100% import tariffs.
POTUS wrote on Truth Social, “The idea that the BRICS Countries are trying to move away from the Dollar, while we stand by and watch, is over.”
The intergovernmental economic – now turned political block – includes Brazil, Russia, India, China, and South Africa. There is now new additions including Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates. They have been discussing alternatives to the US dollar for international trade.
Trump added, “They can go find another sucker nation. There is no chance that BRICS will replace the US dollar in international trade, or anywhere else, and any country that tries should say hello to tariffs, and goodbye to America!”
BRICS vs. America – The economic power thirst
Trump’s reference to tariffs against BRICS countries highlights his return to his well-known trade strategies. In his first term, Trump placed taxes on many goods to help reduce trade imbalances and support American manufacturing.
At the 15th BRICS Summit, the Russian president urged BRICS countries to reduce their use of the US dollar. Putin insisted they should ramp up transactions in their own currencies and improve teamwork among their banks.
Is this even possible? To have a BRICS currency that can compete with the US dollar, the member countries would need to give up their own currencies. This means that they need to create a central bank to manage the new currency together.
Note that the bloc economies are too different from one another for a monetary union to work well. This is because successful monetary unions usually come from small economies that are closely linked.
In addition, they should trade extensively and have shared goals, cultures, similar economic trends, and integrated job markets.
Another thing to consider is that several BRICS countries, especially China, send a lot of goods to the US market. For instance, in 2022, the US bought $536.8B in goods from China. This made it one of the biggest trade ties globally. Trump’s threats to raise tariffs might harm business relationships.
Something to note: BRICS represents nearly half of the world’s population and is also considered a counterpart to the G7 group of countries.
Trump’s tariff plans have yet to account for the impact the Biden administration has left behind. The weak leadership empowered BRICS to grow – a milestone not seen since the group was formed.
The imposition of tariffs in Mexico and Canada is happening
Tariffs are no longer a threat to some nations. Trump has said he will follow through with tariffs on imports from Canada and Mexico with 25% on 1 February.
POTUS’s reasoning behind this is that Mexico’s so-called ‘illegal aliens’ have been crossing the border into the U.S. On the other hand, Canada has been allowing the flow of drugs like fentanyl.
The president asserted, “Until such time that they do, it is time for them to pay a very [a] big price!”
However, Trump said he’s still considering whether to include oil from those countries as part of his import taxes. He stated, “We may or may not.” What will determine his decision is whether oil prices charged by Washington’s two North American trade partners are fair.
On the other hand, officials in Ottawa and Mexico City came up with strategies to respond to Washington’s tariffs with tariffs of their own. The planned action has increased the likelihood of a detrimental trade war.
Also, businesses in the United States and around the world have issued warnings regarding the potential for pervasive disruption in the event that the Trump administration proceeds.
Source: Cryptopolitan