NEW DELHI: Economist Sharad Kohli sees US President-elect Donald Trump’s warning to Brics countries regarding the latter’s de-dollarisation efforts as an economic war on the developing nations.
In an X post, Trump threatened Brics countries that his administration would impose 100 per cent tariffs on all imports from those countries, should they dare to launch their currency.
With growing global fragmentation, and geopolitical and geostrategic shifts, de-dollarisation plans are gathering currency. On the other hand, Brics countries are working on reducing dollar dominance in the global financial system by replacing it with a new global currency.
“In other words, this will almost put an embargo on imports being done from these countries. If we look at it from the other side, the Brics countries will find it impossible to export their products to the US because 100 per cent tariffs would make exports unviable for the Americans to buy,” Kohli told ANI.
The US commands its influence by way of its dollars. Reportedly, an idea was floated at the recent Brics summit for the launch of a currency, which can be used for trade between the member countries. The US sees this idea as a threat as that would reduce the dollar’s dominance.
“We have seen countries collapsing around the world because of the foreign exchange dependence on the US dollars…”
He recalled that India over three decades ago had to pledge its gold to get some foreign exchange.
“The dependence on dollars around the world is what America commands, and if we look at the numbers, almost 60 per cent of the world forex reserves are in US dollars, 88 per cent of international transactions are in US dollars, 62 per cent debt, SWIFT payments being done in dollars, and crude oil prices are governed in dollars,” Kohli added.
“With this threat coming in, Brics countries may have to rethink. And I think this is also a declaration of an economic war on the developing countries by America. This is completely unfair because this is checking the economic independence of the countries in their respective countries. This is literally an economic war,” Kohli asserted. “This is an open declaration by the US President-elect Donald Trump to launch an economic war on the developing countries if they give up US dollars as trading currency between themselves.”
Trump, in his X post earlier today Indian time, asserted that the idea that the Brics Countries are trying to move away from the Dollar while the US stand by and watch is over.
“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.”
Trump added that there is no chance that the Brics will replace the US Dollar in international trade, and any country that tries should wave goodbye to America.
Robinder Sachdev, a foreign affairs expert, believes that Trump’s threat is real.
“Donald Trump’s warning should be taken seriously I think. He will follow up on it. It may take some time, maybe six months, maybe one year into his new presidency. But this is something that we can foresee coming. The US in a way is making a last-ditch effort to stay on and be the number one empire in the world. The next four years are going to be critical. What Trump is attempting is that the world order or the world matrix for the next 40-50 years will be centred around America and America will dominate the foreign policy of nations, the currency of nations and all other related aspects,” Sachdev told ANI.
“What remains to be seen is whether the Brics countries stop their conversations about alternative platforms which they have been doing which I think that they will not. They will continue thinking,” he added.