US tariffs a chance for alternative currencies

DURING the BRICS summits in 2022, 2023 and 2024, member countries engaged in serious discussions about ways to reduce their dependence on the US dollar. While these efforts have since elicited serious punitive threats from the Trump administration, the recent US tariffs will further fuel either de-dollarisation, or diversification of currencies used for international trade, particularly among BRICS countries.

- GIDEON H CHITANGA

The US dollar has been the singular most dominant currency and the sole major international reserve currency since the end of the World War II, dominating and influencing international financial and monetary policies abroad. It became the standard currency for international transactions, hence trade between countries involves converting local currencies into the US dollar. The current international financial and monetary system is disproportionately dominated by the US dollar, which accounts for about 90% of all currency trading. Until 2023, 100% of oil trading was conducted in US dollars, although one-fifth of such trade has since reportedly been conducted using non-US dollar currencies.

Amidst growing debates about the decline of US power, the US dollar stands out as the major anchor of American hegemony. Unsurprisingly, in December 2024, then-presidenti candidate Donald Trump threatened to impose 100% tariffs on the BRICS group of nations if they created a rival currency, resulting in a shift away from the US dollar.

Trump wrote on his social media platform, Truth Social, that “The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is OVER. We require a commitment from these countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty US dollar, or they will face 100% tariffs and should expect to say goodbye to selling to the wonderful US economy.”