De-dollarization cannot be prevented by force of Tariff Trumpet
According to the experts, such tactics are pushing countries to jointly seek alternatives to the dollar
Trump’s trumpeting to stop the de-dollarization of the BRICS countries by using pressure and threatening to impose high duties risks backfiring, experts interviewed by Bloomberg said.
According to them, such tactics of unilateral sanctioning have pushed countries to jointly seek alternatives to the dollar.
“If Trump increases the pressure on BRICS, it may well accelerate a move away from the dollar,” said Rodrigo Catril, a strategist at National Australia Bank Ltd.
In addition, the agency notes that Trump’s public promises to increase import duties are increasing volatility in the currency market.
As a result, according to estimates by Brad Setser, senior fellow at the Council on Foreign Relations and a former US Treasury official, it “suggests a lack of confidence in the dollar,”
The agency recalls that Trump had previously warned the BRICS countries that he intended to oblige them to create a new currency as an alternative to the dollar.
He also promised to impose 100% duties on imported products from these countries otherwise.
“From today, anyone outside the US who uses the dollar for transactions will sense this as a yoke that the US is imposing on them,” said Ulrich Leuchtmann, head of foreign-exchange research at Commerzbank AG in Frankfurt.
On Monday, Kremlin spokesman Dmitry Peskov said that the dollar’s “erosion” was intensifying. According to him, the dollar is becoming less and less attractive as a reserve currency for a number of countries.
He noted that it’s not just with BRICS countries that this trend can be seen.
India decides it’s own policies and therefore is increasingly going in for bilateral trade using local currencies of the two countries.
Thus Rupee/ Dinar is being used for trade between India & UAE and Rupee / Rouble for Indo Russian Trade. Trump or any one else can do nothing about it. “Trump is known to bark more than he bites,” said an expert.
“It’s unclear to what extent he will act on his threat. What standards will the US use to determine if a country has moved away from the dollar? And does US law permit imposing sanctions on countries simply because they are moving away from the dollar?” he added.
The expert explained that, theoretically, a common BRICS currency could protect the group from the dangers of dollar dominance. However, in practice, the member states are not yet ready to create one, either politically or economically.
Earlier, Trump warned that he would impose 100% trade tariffs on goods from BRICS countries if they adopt a new currency or abandon the dollar.
According to him, any nation attempting to replace the dollar for international trade will “say goodbye to America.
“Speaking at the plenary session of Valdai on November 7, Russian President Vladimir Putin stated that it is premature to discuss a single BRICS currency, as the countries in the group have not yet set such a goal.
According to the Russian leader, in order to consider a common currency, the BRICS countries need to “achieve greater economic integration” and improve “the quality of their economies to a level where they are compatible in structure, and in the overall quality of their economies.”
