The US President-elect is undoubtedly concerned about what the BRICS countries might have in business for the US dollar as Donald Trump prepares for a second term in the White House.
And, not surprisingly, Trump is threatening big-time fines for any hint of de-dollarization among Brazil, Russia, India, China, South Africa and the grouping’s novel people, including Saudi Arabia and the United Arab Emirates.
Trump recently posted to his Truth Social system, saying that the notion that the BRICS countries are trying to walk away from the money while we watch and watch is over.
We demand a commitment from these nations that they won’t create a new BRICS money, nor will they support any other money to replace the powerful US money, or that they will be subject to 100 % tariffs, and that they should anticipate saying goodbye to selling into the wonderful US market.
Never simply a delightful bed from the Trump 2.0 group. Trump’s affected tariffs on the BRICS may only serve as fuel for the” International South” to look for or develop a buck alternative.
According to Michael Wan, senior currency analyst at MUFG Research, it’s unclear how 100 % tariffs on a group of nations that make up 37 % of global GDP would actually occur.
Additionally, it’s unclear how the BRICS’ sky-high taxes would benefit the world’s largest economy. But as Deutsche Bank argues, Trump’s preoccupation with a powerful money appears greater than ever.
” This seems to further show that money strength is an concern for the new leadership, unlike Trump 1.0″, when the US took a less ambitious approach, Deutsche researchers wrote.
Development countries have plenty of reason to be concerned about the dollars with US government debt exceeding US$ 36 trillion and Trump countering enormous budget-busting tax cuts. Washington, after all, only has one AAA record score left — from Moody’s Investors Service.
Morgan Stanley, for one, is advising that it might be time to sell the dollars. According to scientist David Adams,” a lot of the great news for the USD” has already been priced, with the majority of them having “largely internalized the US outperformance storyline” based on Trump’s pledges to impose their tax and trade policies. Businesses, though, may become “overestimating the rate, depth and scale” of those swings.
” We sense investment attitude on the whole is very productive on the franc, suggesting asymmetrical risks for a’ problems trade,’ in the months ahead”, Adams noted.
Trump World has made it clear the US Federal Reserve’s democracy, a key component in global confidence in the greenback, is also on the board come January. The” Project 2025″ system that his Democratic party cooked up for Trump 2.0 includes treatments for curbing the Fed’s much-vaunted freedom.
The Fed almost escaped Trump 1.0 unhurt. Trump placed the pressure on his hand-picked Fed Chairman Jerome Powell first and frequently during his first term in office, which spanned from 2017 to 2021.
Trump attacked the Powell-led Fed in statements, press events and on social media. Trump also mulled firing Powell. The Fed started adding liquidity to an business that didn’t have any additional assistance in the same year.
In October, Trump mocked Powell’s policy staff over. ” I think it’s the greatest job in government”, Trump told Bloomberg. Everyone talks about you like a god when you say, “let’s say turn a gold,” and you show up to the office once a month.
But , Trump , even defends the right of the leader to persuade the Fed into lowering costs. In August, Trump said,” the Federal Reserve , is a very fascinating thing and it’s sort of gotten it wrong a bunch”.
Trump added,” I feel the leader should have at least stayed there, yeah. I feel that clearly. I think that, in my situation, I made a lot of money. I was extremely prosperous. And I believe I have a better impulse than those who, in many cases, may become chairman of the Federal Reserve.
For Asian officials and politicians, it’s a truly personalized abuse on the Fed’s position. The largest US Treasury supplies ever held by Eastern central bankers are held by the world’s largest central banks. Japan only holds$ 1.1 trillion , of US loan, China$ 770-plus billion.
More broadly, Asia’s largest holders of dollars are sitting on about$ 3 trillion worth. It all implies that a Trump 2.0 administration would put a lot of Asian state success in danger.
Actually so, Trump is trying to wrench up tariff-induced problems for any country — or economic bloc — brave to champion a penny alternative.
The coming Treasury Department, however, was apply currency manipulation charges, trade controls or levies on trade beyond anything Trump has previously suggested or announced.
Trump appears to be prepared to punish allies who look to conduct bilateral trade in currencies other than the dollar, as well as adversaries. In March, Trump told CNBC that he “would not allow countries to go off the dollar”, as it would be” a hit to our country”.
Yet de-dollarization has moved to the center of the BRICS agenda, particularly since the grouping’s 2023 summit. Both Trump’s and US President Joe Biden’s fingerprints are present in this backlash.
Trump’s meddling with the Fed, hints at defaulting on US debt, and fiscal excesses affected dollar perceptions significantly. When Fitch Ratings revoked Washington’s AAA status, it , cited the Capitol Hill chaos on , January , 6, 2021, as a “reflection of the deterioration in governance” imperiling US finances.
Biden-led efforts to impose economic sanctions on Russia, including accusations of “weaponizing” the dollar, exacerbated the problem.
” The United States ‘ ability to hobble Russia to this extent, without firing a shot, highlights the sovereignty of the United States and the dollar in the global economy”, argues George Pearkes, an analyst at the Atlantic Council’s GeoEconomics Center.
” In this case”, Pearkes noted,” sovereignty is the degree to which a currency issuer can dictate the use of that currency”. But, he added,” by using the power of dollar sovereignty, dollar sovereignty risks endangering the reserve status, which allows it to be weaponized”.
To be sure, Pearkes noted that “aggressive use of dollar weaponization has been signaled repeatedly by US policymakers to achieve US goals in the current Ukraine dispute.”
Although this would have a significant impact on Russia, he noted that “negative feedback on dollar sovereignty will be measured in decades rather than years— and will unavoidably come.”
According to Pearkes,” the ability to restrict access to financial markets is significantly more powerful than it has historically been.” What’s more, he noted,” the weaponized dollar” was “already a fact of life in global affairs” before Russia invaded Ukraine.
Pearkes noted that” the governments of Cuba, Iran, North Korea and Venezuela can all attest to that fact, as can their civilian populations. In all four countries, dollar sovereignty has been weaponized in a contemporary context”.
Trump is, however, steadfast in his desire to avoid the risk that the Global South might lose the dollar.  ,
There is no way the BRICS will ever replace the US dollar in global trade, and any nation trying should wave goodbye to America, Trump said via social media.
Trump has recently shook markets with plans to impose 25 % tariffs on Canada and Mexico as well as additional levies on China up and above the 60 % he has already threatened.
Curiously, Trump said he’s had contact with Chinese leader Xi Jinping in recent days. Over the weekend, Trump told NBC that “we’ve had communication”.
At the Group of 20 summit in Japan in June 2019, Trump and Xi had their final in-person meeting. Trump stated to NBC,” I had an agreement with President Xi, who I got along with very well.
Still, Trump World is clearly steeling for a Trade War 2.0 with Xi’s Communist Party. Last week, Trump buttressed his” Tariff Man” street cred by naming uber-China hawk Peter Navarro as his top trade adviser. Navarro,  , who in 2011 co-authored a book titled” Death by China”, rarely misses a chance to accuse Xi’s party of “robbing us blind”.
Trump also appointed aggressive China critic Marco Rubio as secretary of state, and padded his next trade negotiations team with extremists like Jamieson Greer and Robert Lighthizer.
Trump 2.0’s supporters contend that tariffs are merely a tactic used to bring Xi’s party to consensus. Yet Xi’s inner circle seems unsure of Trump’s sincerity concerning a new “grand bargain” trade deal.
Case in point: Beijing’s move to limit the sales of key components used to build drones to the US and Europe. While bad news for Ukraine’s defense against Russia, it also serves as a sign of upcoming broader export restrictions.
China also opened an investigation into US chipmaker Nvidia this week following concerns that the business might have violated its anti-monopoly laws. This is also being interpreted as a sign of targeted Chinese trade war retaliation measures. Nvidia is at the center of Nvidia’s efforts to rule the artificial intelligence market.
Earlier this year, the BRICS added Egypt, Ethiopia, Iran, Saudi Arabia and the UAE to its ranks.
Mariel Ferragamo, a member of the Council on Foreign Relations, said,” The addition of Egypt and Ethiopia will amplify voices from the African continent.” Egypt also shared close political ties with Russia and close business ties with China and India. As a new BRICS member, Egypt seeks to , attract more investment , and improve its battered economy”.
According to Ferragamo,” the addition of Saudi Arabia and the UAE would bring in the Arab world’s two biggest economies, as well as the second and eighth top oil producers globally.”
Yet the most powerful connector among BRICS members, old and new, is stepping out of Washington’s financial orbit. As such,” we think the bloc , has  , the most potential to forward its de-dollarization agenda in , FX reserves and fuel trade”, said Chris Turner, global markets head at ING Bank.
Turner noted that the BRICS bloc controls 42 % of global central bank currency reserves, likely contributing to the global de-dollarization process.
The BRICS is “gaining more and more visibility as a trade partner for other emerging markets, particularly in the fuel trade,” adding that it is “gaining more and more ground in regional trade.” BRICS accounts for 37 % of the EM fuel trade, a key area of interest for de-dollarization”, he said.
The BRICS , Turner noted, “is actively de-dollarizing its financial flows from above-average levels, as seen through declining shares of US dollar in their cross-border bank claims, international debt securities, and broader external debt”.
The BRICS , according to Turner, “has a much smaller global presence in those areas that limits the impact of its regional de-dollarization on the global role of the US dollar.”
Even so, the BRICS are causing the dollar to pivot, despite Trump’s efforts to stifle the process. Perhaps the better course of action would be to improve the US financial system.
But that seems unlikely as Trump eyes additional multi-trillion-dollar tax cuts sure to push America’s national debt toward an eye-watering$ 40 trillion over the next four years.
Trump may also be using the reserve currency to defy de-dollarization advocates. With the BRICS cast playing the role of a spoiler, the dollar will likely be a major battleline in the Trump 2.0 era.
Follow William Pesek on X at @WilliamPesek