Despite a stern warning from President-elect Donald Trump, the BRICS economic alliance is pressing ahead with its plan to develop a new payment system, signaling that the group is undeterred by potential consequences. In a recent post on Truth Social, Trump declared that his administration would impose a 100% tariff on countries abandoning the US dollar, specifically targeting the BRICS nations. This aggressive stance underscores his administration’s commitment to protecting the dominance of the US dollar as the global reserve currency. However, the BRICS bloc remains steadfast in its pursuit of de-dollarization and a new payment system.
BRICS Growth and De-Dollarization Efforts
Since its inception in 2001, BRICS — comprising Brazil, Russia, India, China, and South Africa — has been an influential economic force. However, in the past two years, the alliance has accelerated its efforts to reduce dependence on the US dollar, particularly in the wake of Western sanctions imposed on Russia after its invasion of Ukraine in 2022. These sanctions galvanized the BRICS countries to seek alternatives to the dollar in international trade, with many nations in the global south eager to establish a more independent economic system.
While Trump’s tariff warning seems to have had some impact, with a few nations backing off from fully embracing de-dollarization, the bloc is continuing its pursuit of a new payment system. Russian Deputy Foreign Minister Alexander Pankin recently confirmed that the development of the payment system is moving forward. This system, which is intended to facilitate trade between BRICS nations without relying on the dollar, is a critical step in the bloc’s efforts to reshape global economic dynamics.
No New Currency, But a New Payment System
One key detail that emerged from Pankin’s statement is that the BRICS alliance is no longer considering the creation of a new currency to replace the US dollar. This shift in strategy appears to be a response to Trump’s concerns over the potential for a rival currency to challenge the dollar’s dominance. Instead, the focus is now on developing a payment system that can bypass the dollar, allowing BRICS countries to engage in trade more autonomously.
Despite the challenges ahead, particularly with the incoming US administration’s firm stance on the dollar, the BRICS bloc remains resolute. While Trump’s tariff threat may have prompted some reconsideration among certain nations, the group as a whole continues to move forward with its plans. This ongoing development is expected to be a key issue as Trump returns to office in 2025, with many speculating that his second term may bring a more pragmatic approach to relations with the global south.
The Future of BRICS and the US Dollar
The launch of the BRICS payment system marks a significant milestone in the ongoing saga of de-dollarization. As the global economic landscape evolves, it remains to be seen how the US will respond. Will Trump’s tariff threat prove effective in reversing the momentum behind the BRICS payment system, or will the alliance continue its push toward a more diversified global financial system? Only time will tell, but the development of this payment system is likely to be a major focal point in the coming years.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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