WEST PALM BEACH, Fla. (AP) — President-elect Donald Trump on Saturday threatened 100 per cent tariffs against a bloc of nine nations if they act to undermine the US dollar.
His threat was directed at countries in the so-called BRIC alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates.
Turkey, Azerbaijan and Malaysia have applied to become members and several other countries have expressed interest in joining.
While the US dollar is by far the most-used currency in global business and has survived past challenges to its preeminence, members of the alliance and other developing nations say they are fed up with America’s dominance of the global financial system.
The dollar represents roughly 58 per cent of the world’s foreign exchange reserves, according to the IMF and major commodities like oil are still primarily bought and sold using dollars. The dollar’s dominance is threatened, however, with BRICS’ growing share of GDP and the alliance’s intent to trade in non-dollar currencies — a process known as de-dollarization.
Trump, in a Truth Social post, said: “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 said there is “no chance” BRIC will replace the US dollar in global trade and any country that tries to make that happen “should wave goodbye to America.”
Research shows that the US dollar’s role as the primary global reserve currency is not threatened in the near future.
An Atlantic Council model that assesses the dollar’s place as the primary global reserve currency states the dollar is “secure in the near and medium term” and continues to dominate other currencies.
Trump’s latest tariff threat comes after he threatened to slap 25 per cent tariffs on everything imported from Mexico and Canada, and an additional 10 per cent tax on goods from China, as a way to force the countries to do more to halt the flow of illegal immigration and drugs into the US
He has since held a call with Mexican President Claudia Sheinbaum, who said Thursday she is confident that a tariff war with the United States can be averted. Canadian Prime Minister Justin Trudeau returned home Saturday after meeting Trump, without assurances the president-elect will back away from threatened tariffs on Canada.
