Trump threatens 100% tariffs on BRICS nations amid concerns over US dollar replacement

US president-elect Donald Trump has threatened to impose 100% tariffs on a bloc of nine nations if they create a rival currency to the US dollar.

The BRICS alliance – named after the original five member nations of Brazil, Russia, India, China and South Africa – was formed in 2009 to advance the interests of emerging economies and make them less dependent on the US dollar.

The organisation expanded to nine nations in January when Iran, Egypt, Ethiopia and the United Arab Emirates became official members.

Commitment sought

Mr Trump has taken to his social media platform Truth Social to demand a commitment from BRICS members that they will not move away from the dollar, the most commonly used currency in global commerce.

“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,” he said.

“[If not,] they will face 100% tariffs and should expect to say goodbye to selling in the wonderful US economy.”

The warning came less than a week after Mr Trump declared he would impose tariffs on Canada, Mexico and China once he was inaugurated as president.

Global impact

BRICS accounts for 37% of the global economy and around 40% of the world’s population.

Member nations include some of the world’s largest importers (China and India) and exporters (Russia and the United Arab Emirates) of oil.

Türkiye, Azerbaijan and Malaysia have recently applied to become members, while several other countries including Saudi Arabia have expressed interest in joining.

New bank established

BRICS members set up the New Development Bank in 2014 to lend money to developing countries to boost their infrastructure and sustainability.

Group members have also pursued policies to reduce reliance on US dollars, with Russia de-dollarising its reserves and trade after being heavily sanctioned in 2022 for invading Ukraine.

The BRICS bloc hopes that alternative lending institutions can increase co-operation between emerging economies and reduce dependence on Western-led funding sources.

Foreign exchange reserves

The US currency represents roughly 58% of the world’s foreign exchange reserves, with major commodities such as oil still primarily bought and sold using US dollars.

If Mr Trump’s threat is implemented, a 100% tariff at the US border would sharply drive up the cost of goods from BRICS members.

This would, in turn, fuel US inflation and destabilise global trade flows.