New York: After Donald Trump threatened 100% tariffs on BRICS nations—which also includes India— if a new BRICS currency was developed as an alternative to the US dollar, India has adopted a cautious approach to ‘de-dollarisation.’ Trump’s warning to BRICS nations—Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates—came after the bloc’s members met in Russia in October and discussed boosting non-dollar transactions.
“The idea that the BRICS Countries are trying to move away from the dollar while we stand by and watch is OVER,” Trump said in a post to his Truth Social network on Saturday. “There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America,” Trump added.
“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 U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” he added.
Earlier, Trump had vowed during his campaign trail that he would make it expensive for countries to move away from the US dollar.
According to reports, Trump and his economic advisers had been discussing ways to punish allies and adversaries alike who would seek to engage in bilateral trade using currencies other than the dollar.
When was de-dollarization issue discussed?
The de-dollarization issue was first discussed by the BRICS nations at a summit in 2023. The backlash against the dollar’s dominance gained traction in 2022. It was started as the US led efforts to impose economic sanctions on Russia. Some potential dollar rivals such as the Chinese yuan have already made inroads. But the infrastructure that backs dollar, including cross-border payment system, will still give the US currency an edge over its rivals for some decades, experts opined. This was evident when the organizers of the BRICS meeting in Kazan encouraged attendees to bring US dollars or euros with them as non-Russian Mastercard or Visa cards don’t work in the country. The meeting was hosted by Russian President Vladimir Putin, a champion of reducing the international dominance of the dollar.
Where does India stands?
India is one of the few countries among the BRICS nations that has been performing well economically on its own. According to reports, New Delhi sees no compelling reason to support a common currency that could potentially undermine its economic stability. India is also wary of China’s increasing influence within the BRICS. It is also concerned about the potential for Beijing to use the bloc to push its own economic and geopolitical agenda. India’s own trade and financial transactions are heavily dependent on the US dollar. Experts believe that India is reluctant to bat for a BRICS currency as it does not want to risk its lucrative trade deals with Western powers and thus it has a cautious approach and tries to maintain a balanced foreign policy.
