The 47th President of the United States has long been making bold statements about the policy he wants to pursue – a typical example of such a repeated statement is his pledge to impose 100% import tariffs on BRICS countries if they attempt to undermine the dollar and move away from it.
Trump told Truth Social on January 30 that the United States had previously tolerated the BRICS countries’ attempts to move away from the currency silently, but that is no longer the case. The President of the United States explained his strategy for thwarting such efforts: “We will demand a commitment from these seemingly hostile countries that they will neither create a new BRICS currency, nor support any other currency that will replace the mighty dollar, or that they will face 100% tariffs and have to wait to sell out to the great U.S. economy.” “They can go find another…sucker.”
He repeated this threat: “…any country that tries, suffer the tariffs and say goodbye to America!” He concluded his post by arguing that efforts to de-dollarize America’s opponents will fail – “there is no way the BRICS will replace the dollar in international trade or anywhere else.” This claim is not particularly impressive in terms of its practical results. Trump has consistently made threats against states that challenge the dollar’s dominance. He also blamed the 46th President, Joe Biden, for failing to adequately address such threats.
His position on the dollar and the BRICS
Trump reiterated his commitment to maintaining the dollar as the dominant reserve currency throughout his 2024 campaign. He pledged to take action against countries that implemented de-dollarization policies:
On March 11, 2024, he told CNBC: “I get angry when nations abandon the currency. I would not allow nations to abandon the dollar, as losing that monetary standard would be equivalent to the consequences of losing a Revolutionary War. It would be a catastrophic setback.”
In September 2024, during a campaign rally in Wisconsin, Trump acknowledged that many nations were “abandoning the dollar,” but pledged to restore its status. Otherwise, he vowed to take serious action against those who planned to de-dollarize the global economy.
In addition to those who refused to use the dollar as a reserve currency, he attacked those who manipulated the dollar’s exchange rate. He stressed that, during his term as the 45th president, he fought against currency manipulators. Washington accused Beijing of artificially devaluing the yuan to boost its exports in 2019, labeling Beijing a “currency manipulator.”
The Currency Threat
Trump’s team of advisers has been of the opinion that the United States should focus on the efforts of the BRICS countries to create a new currency, a topic that was discussed at the BRICS summit in August 2023. However, the threat of a 100% tariff by the United States has no consequences for some countries.
Russia has already reduced exports to the United States to zero. This also has little consequence for China, as Trump has already committed to a 60% tariff on Chinese imports – he has already started with 10%. Raising it to 100% would not significantly change the situation.
Attacking Biden
Trump has criticized Joe Biden for undermining the dollar, not just through inaction but also through poor decisions. Biden’s April 2024 law, which gave him new authority to seize Russian dollar assets to support the reconstruction of Ukraine, is a case in point.
Trump has argued that this is eroding global confidence in the U.S. currency. The International Monetary Fund (IMF) tracks the dollar’s share of global foreign exchange reserves on a quarterly basis, a crucial indicator of its strength.
The dollar’s share of global foreign exchange reserves was 59.0% at the end of 2020, before Biden took office. By the end of 2024, that share had fallen to 57.4%, representing a 1.6 percentage point decline during Biden’s term.
The IMF has not recorded a lower level since 1995. The highest share was in 2001, at 73%. However, the dollar’s share fell significantly during Trump’s inaugural presidency (2017–2021). It was 63.6% at the end of 2016. By the end of 2020, the dollar had fallen 4.6 percentage points, a more significant decline than Biden. Trump significantly weakened the dollar more than Biden.
Trump has argued that this is eroding global confidence in the U.S. currency. The International Monetary Fund (IMF) tracks the dollar’s share of global foreign exchange reserves on a quarterly basis, a crucial indicator of its strength.
The dollar’s share of global foreign exchange reserves was 59.0% at the end of 2020, before Biden took office. By the end of 2024, that share had fallen to 57.4%, representing a 1.6 percentage point decline during Biden’s term.
The IMF has not recorded a lower level since 1995. The highest share was in 2001, at 73%. However, the dollar’s share fell significantly during Trump’s inaugural presidency (2017–2021). It was 63.6% at the end of 2016. By the end of 2020, the dollar had fallen 4.6 percentage points, a more significant decline than Biden. Trump significantly weakened the dollar more than Biden.
The Cryptocurrency Plan
There are already signs that the dollar’s decline could accelerate under Trump’s second term. There is no de-dollarization plan from the BRICS group of countries that is comparable to Trump’s own proposals, which have the potential to undermine the US currency. He has publicly conveyed his strong support for private digital currencies, such as cryptocurrencies.
He promised to establish the United States as the “crypto capital of the world” during his campaign. His proposals include the following:
- The creation of a “Bitcoin National Reserve” would include Bitcoin in the United States’ international reserves in addition to gold. There is currently a process underway to pay off the US national debt with cryptocurrencies.
- The creation of new power generation facilities to facilitate the expansion of cryptocurrency mining.
- The creation of a favorable tax regime for cryptocurrency companies.
- The creation of a White House advisory council on cryptocurrencies.
Several prominent crypto enthusiasts, including Elon Musk, David Sacks, and Scott Bessent, are members of Trump’s inner circle.
The Federal Reserve vs. Trump
Furthermore, there are signs of an unprecedented clash between the Federal Reserve and the Trump administration. The long history of the US Federal Reserve has not witnessed this level of tension. A clash of this nature will only exacerbate the dollar’s difficulties and is something that markets are watching closely. Any loss of confidence in the US market will be costly in terms of rising borrowing costs.
Contradictory rhetoric… Between the stick and the carrot
Trump has made many statements and promises that are in direct opposition to each other. Some statements are explicitly contradictory.
His rhetoric can be characterized as a collection of antinomies, which are statements that lead to mutually exclusive conclusions.
On the one hand, a hard dollar that reflects the strength of the US economy and on the other, a looser exchange rate that would reduce the serious trade deficit that the US faces with its major partners – mainly with China – and the “hemorrhage” of the productive base by exporting jobs.
Trump’s “monetary antinomies” highlight the serious divisions in America’s leading economic circles.
Each of these contradictions has the potential to be disastrous for the dollar and the US as a whole.
