De-Dollarisation Battle: Economist Warns Trump’s Tariff Threats Could Backfire on US Economy

New Delhi, December 1: Reacting to US President-elect Donald Trump’s warning to BRICS countries over their de-dollarisation efforts, Chief Economist at Infomerics, Manoranjan Sharma, has cautioned that such actions could severely harm the US economy itself.

Sharma emphasized the interdependent nature of global trade, highlighting how increased tariffs could render American products uncompetitive due to their reliance on imported intermediate goods.

“It will have a severe impact on the US economy. America is heavily dependent on imports for many essential goods. Imposing 100 per cent tariffs on BRICS imports would escalate production costs, making American products uncompetitive both domestically and internationally. This would hurt the US economy in terms of foreign trade and domestic growth,” Sharma stated.

The De-Dollarisation Momentum

Sharma noted that the de-dollarisation movement has gained significant traction over the past two years, fueled by the US Federal Reserve’s interest rate hikes and the geopolitical fallout from Russia’s invasion of Ukraine. He further explained:

“This de-dollarisation move has been building for the last four to five years, gaining momentum recently due to rising US debt costs and increased imports. While the process will be long and drawn out, it will ultimately dent the global capitalist system, impacting free trade and market economies, and hurt the American economy.”

Trump’s Warning to BRICS

In a strongly worded X post, Trump warned that his administration would impose 100 per cent tariffs on all imports from BRICS countries if they pursued plans to launch a new global currency to challenge the US dollar.

“We require a commitment from these countries that they will neither create a new BRICS currency nor support any currency to replace the US dollar. If they proceed, they will face 100 per cent tariffs and lose access to the US market,” Trump wrote.

BRICS and Global Currency Moves

BRICS nations—Brazil, Russia, India, China, and South Africa—have been working on reducing the dollar’s dominance in global trade. The proposal for a shared BRICS currency, floated during the recent BRICS summit, aims to bolster trade among member nations and shift power dynamics in the global financial system.

The US sees this effort as a significant threat, as the dollar’s dominance has long underpinned its economic influence worldwide.

Potential Fallout

Sharma warned that aggressive tariff policies and resistance to de-dollarisation could lead to global economic fragmentation. “The entire capitalist system relies on free trade and open markets. This approach will disrupt global trade processes and hurt not only the BRICS nations but also the US economy itself,” he concluded.