A warning by US President-elect Donald Trump to BRICS countries, threatening to impose 100 per cent customs duties if they move to replace the US dollar, has been labelled unrealistic by the Global Trade Research Initiative (GTRI). The think tank, in a statement on Sunday, urged India to focus on developing a workable local currency trading system instead.
BRICS, an international group formed in 2009, consists of Brazil, Russia, India, China, and South Africa, with some members like Russia and China actively seeking alternatives to the US dollar, or exploring the possibility of a shared BRICS currency. India has so far not joined this initiative.
Trump’s warning on Saturday suggested that BRICS nations would face harsh tariffs if they pursued this course. However, GTRI argued that such tariffs would ultimately harm US consumers by raising import prices, disrupting global trade, and risking retaliatory actions from key trading partners.
GTRI founder Ajay Srivastava described Trump’s threat as unrealistic, labelling it symbolic rather than practical. “For India, the prudent approach is to focus on making local currency trading workable by establishing a transparent and open currency exchange,” he said.
Srivastava pointed out that India’s best interests lie neither in the dominance of the US dollar nor in fully adopting a BRICS currency at this stage. "By enhancing its own financial infrastructure, India can better navigate the shifting dynamics of global trade," he added, cautioning against threats that undermine diplomatic relations and ignore the multipolar nature of the current global order.
He further argued that no single country, including the US, has the power to unilaterally dictate global economic policies without facing consequences. "Countries have the right to make decisions in their best interests, especially when existing systems have been used against them," he said.
While the US dollar dominates global trade, accounting for over 90 per cent of transactions, the GTRI noted that other convertible currencies such as the Japanese yen, the euro, and the British pound are also vital to international commerce, and the US has not objected to their use.
It stressed that the proposed BRICS currency is merely an extension of these alternatives, aiming to facilitate trade among member countries and reduce reliance on a single currency.
The think tank also pointed out that the US’s actions have driven many countries to seek alternatives to the dollar, citing the US’s history of using its financial influence, such as over the SWIFT network, to impose unilateral sanctions.
Imposing a 100 per cent tariff on BRICS countries, the GTRI warned, could backfire economically. While such tariffs might disrupt parts of global trade, they would ultimately hurt the US the most, as imports into the US would simply shift to third countries, increasing costs for American consumers without reviving domestic manufacturing jobs.
The GTRI also noted that the US has become less competitive in manufacturing labour-intensive goods due to high production costs, and tariffs are unlikely to reverse this trend.
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