Trump's warning to BRICS countries

Beyond the rhetoric and hype

Introduction

While issuing a warning to countries going in for de-dollarization or a BRICS currency -- via a social media post on January 30^, 2025, US President Donald Trump said:

". They can go find another sucker Nation. There is no chance that BRICS will replace the US Dollar in International Trade, or anywhere else, and any Country that tries should say hello to Tariffs, and goodbye to America!"

Trump had already announced tariffs against Mexico, Canada and China and these will come into force on February 4, 2025. Mexico and Canada have also announced retaliatory tariffs against the US.

Trump’s warning to countries trading in non-dollar currencies

This is not the first time that Donald Trump has issued such a stern warning to countries – especially BRICS member states -- trading in local currencies. While several countries have gone in for de-dollarization in recent years, it is important to understand a few points. First, with the recent entry of Indonesia into the BRICS grouping, it now accounts for 40% of the world economy and nearly half of the global population. At the last previous summit in Kazan (Russia), China’s President Xi Jinping had said:

“We must make full use of this summit, maintain the momentum of Brics, and consider and devise our strategy to address issues that have a global impact.”

Second, trade in local currencies has gained momentum after the imposition of sanctions on Russia in the aftermath of Russia-Ukraine war. Several of the countries which have been carrying out trade in local currencies share close ties with the US. Prominent examples of the same are India and UAE.

During Indonesian President, Prabowo Subianto’s recent visit to India, both countries had agreed to give a fillip to trade in local currencies. India is also exploring the possibility of trade in non-dollar currencies with several other countries. During Malaysian Prime Minister, Anwar Ibrahim’s India visit, last year, an agreement for promotion of trade in local currencies was signed

Third, countries like India have supported trade in local currencies but categorically ruled out the possibility of a BRICS currency. India’s External Affairs Minister, S. Jaishankar has categorically made this point. After Trump’s recent warning, on January 30, 2025, India’s External Affairs Ministry reiterated the point that:

“On de-dollarisation, the External Affairs Minister has made it clear that we don’t have any policy or strategy in this regard,”

Finally, for China and Russia the weakening of a US dollar is linked to their strategic goals for others such as India, exploring alternatives is linked to their economic interests as mentioned earlier.

Trump’s recent warning to countries going in for de-dollarization is linked to his “America First strategy”. Action against countries trading in local currencies will not be easy and individuals within his team may advise him against the same. Washington also needs to understand, that several countries have opted for trade in local currencies, due to the imposition of sanctions on Russia and not with the intention of weakening the US dollar. If these sanctions are removed or even relaxed, several countries may avoid trade in local currencies. Apart from several other reasons, one of the key factors why several countries are eagerly waiting for a resolution to the Russia-Ukraine conflict is the complication of economic linkages with Russia due to the stringent sanctions imposed by Washington.

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