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- US presidential candidate Donald Trump threatens BRICS and countries that want to move away from the dollar with a 100% tariff.
- According to an expert, this could be a lose-lose situation for the US and other countries like China, as both economies could be negatively affected.
The BRICS alliance has proposed setting up a new currency for trade among member countries as part of its de-dollarization strategy. Pending the August 2023 BRICS Summit, this initiative was speculated to be the principal topic of discussion. However, this proved to be wishful thinking. The possibility is still imminent, with Brazilian President Luiz Inacio Lula da Silva showing support for the BRICS currency last year.
Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China and between Brazil and all the other BRICS countries? Who decided that the dollar was the (trade) currency after the end of gold parity?
As we reported recently, Kremlin aide Yury Ushakov disclosed that the alliance is working on a blockchain-based payment system. Fascinatingly, this could be extensively deliberated in the upcoming BRICS Summit in October 2024. A successful implementation could be a massive step towards the movement away from the US dollar. Unfortunately for the US, industry insiders believe that this could leave a grievous impact on their social and economic standing.
Trump to Step in With Tariff Threat
US presidential candidate Donald Trump has pledged to resist this move by imposing a 100% tariff on goods from such countries entering the US during his presidency to prevent this from happening.
This is what he said at a rally in Wisconsin.
Many countries are leaving the dollar. They not going to leave the dollar with me. I’ll say, you leave the dollar, you’re not doing business with the United States because we’re going to put a 100% tariff on your goods.
Outside the BRICS strategies, Russia and China are almost ditching the US dollar completely as they settle a bilateral trade. In response, Trump proposed early this year that his administration would subject all China imports to a 60% increment when elected into office.
Expert Weighs the Cost and Benefit of this Decision on the US and the BRICS
Analyzing the potential impact, GROW Investment Group partner and chief economist Hao Hong disclosed that Trump’s decision could be a lose-lose situation for both the US and China.
Because the Chinese export sector has been so competitive, it’s been a driving force in lowering global inflation. If you put a 100% tariff on Chinese exports, for example, one could only imagine how high the U.S. inflation is going to go.
According to Hong, much of the US trade deficit would move to allies like Mexico and Canada. Defending Trump’s position, the expert explained that the campaign message was meant to protect the hegemony of the U.S. dollar in the financial market. The US dollar also dominates global forex reserves despite witnessing shares dropping by more than 70% in 1999.
Trump’s threat, according to analysts, could jeopardize the hope and position of Bitcoin (BTC) becoming a central currency within any of the alliances that seek to move away from the dollar. However, the broad digital asset market would not be impacted much even if this policy materializes.
Commenting on this, a Bitcoin influencer identified as “Beautyon” stated that moving away from the dollar is worth much more than the proposed 100% tariff.
If the BRICS are ditching the dollar as the result of logic and long-term thinking, then no, it will not be enough. BRICS will know that in the long run, getting the yoke of the dollar off of the necks of their people will be worth much more than the 100% tariffs the U.S. will… https://t.co/2PrULUsG5a— Beautyon (@Beautyon_) September 9, 2024
At press time, Bitcoin was trading at $55.2k, having surged by 1.3% in the last 24 hours.
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