Trump's Reaction to the Idea of a BRICS Currency

Donald Trump's recent warning about imposing 100 percent tariffs on BRICS countries—should they pursue a common currency—has left many experts scratching their heads. The idea of a unified currency among BRICS nations is widely viewed as improbable.

The BRICS group, which consists of Brazil, Russia, India, China, and South Africa, along with a few more recent members, lacks the cohesion needed to form any kind of financial alliance. While Russian President Vladimir Putin has made headlines by showcasing a colorful BRICS banknote at a recent summit, he has also made it clear that the group is not seriously considering developing a new currency.

These nations share a common discontent towards the existing US-led world order and feel that their voices often go unheard. However, they are hampered by a lack of significant institutions or capabilities to facilitate such an ambitious economic initiative.

For instance, the New Development Bank, based in Shanghai and formerly known as the BRICS Development Bank, is not positioned to act as a central bank for a potential new currency. Meanwhile, the annual BRICS summit provides a platform for the leaders to connect and make mostly symbolic gestures, but it does little beyond that.

Despite the undercurrents of resentment towards US dominance, the term "BRIC" was actually popularized by American investment bank Goldman Sachs. British economist Jim O'Neill coined the acronym to inform clients about investment and trading trends, similar to how "PIGS" was used during the European debt crisis.

The political significance of BRICS began to take shape after the 2008 G8 summit in Japan. There are unconfirmed accounts that during this summit, Japan recognized G8 members as honored guests while the BRICS nations—including China, Brazil, Mexico, India, and South Africa—were treated as peripheral. This led to the G8+5 format being swiftly abandoned in favor of the more inclusive G20, where BRICS countries found common ground and camaraderie.

The first BRIC summit took place in 2009, and South Africa's addition in 2010 gave rise to the acronym "BRICS." While the validity of Trump's concerns may be quite questionable, they nonetheless highlight the enormous influence that the US dollar continues to wield, particularly within the developing world.

Trump, BRICS, Currency