Trump’s Tariff Threat: BRICS and the Dollar Dilemma

President-elect Donald Trump has warned BRICS countries of 100 percent tariffs if they de-dollarize. Former RBI Governor Subbarao highlighted internal BRICS differences on an alternative currency. Politics and economics hinder such moves, with China better positioned than India due to its global trade presence.

In a stark ultimatum, President-elect Donald Trump has issued a warning that BRICS countries, if they attempt to pivot away from the US dollar, will face 100 per cent tariffs. However, the feasibility of such a threat remains questionable, as pointed out by former RBI Governor Duvvuri Subbarao.

Subbarao emphasized that within BRICS itself, there are internal disagreements over the idea of developing an alternative currency to the dollar. The member nations, including India, Russia, China, and Brazil, encounter both political and economic barriers, making the concept of a unified BRICS currency still a distant prospect.

Despite the rhetoric, many wonder about the practical implications. How would the US gauge a country's departure from dollar usage, and does existing American legislation allow for punitive tariffs based solely on de-dollarization efforts? Subbarao notes China's stronger position in international trade, unlike India, which still heavily relies on the US dollar.

(With inputs from agencies.)