President Donald Trump on Thursday repeated a warning that he will impose 100 percent tariffs on members of the BRICS economic bloc if they attempt to replace the U.S. dollar as a reserve currency.
The original BRICS nations include Brazil, Russia, India, China, and South Africa, but the bloc has expanded to include Egypt, Ethiopia, Iran, and the United Arab Emirates. Indonesia became a member earlier this month.
On Friday, Kremlin spokesperson Dmitry Peskov said BRICS members were not talking about setting up a currency but creating joint investment platforms.
“The point is that BRICS is not talking about creating a common currency, nor has it ever done so,” Peskov said. “BRICS is talking about creating new joint investment platforms that would allow joint investments in third countries, mutual investments and so on.”
These included creating a unit of account (Unit), a platform for international settlements in BRICS digital currencies (Bridge), a payment system (Pay), a settlement depository (Clear), an insurance system (Insurance), and a BRICS rating alliance.
A unit of account could be pegged partly to gold and partly to a basket of BRICS members’ national currencies, Mikhailishin said.
“When you have a unit of account that can be converted into any national currency, it is more convenient for you to hold it, since it is a more liquid instrument,” Mikhailishin said.
In October 2024, the leaders of the BRICS bloc backed overhauling the global financial system and ending the dominance of the U.S. dollar when they met at a BRICS summit held in Kazan, Russia.
Among them was Brazilian President Luiz Inacio Lula da Silva, who touted the creation of a common cross-border payments system that would help BRICS countries trade with each other, therefore bypassing the dollar-dominated global financial system.
Lula said the group’s New Development Bank (NDB)—a multilateral development bank established by BRICS—was designed as an alternative to what he called failing Bretton Woods institutions such as the International Monetary Fund (IMF).
The Brazilian leader said the NDB already had a portfolio of nearly 100 projects, amounting to about $33 billion.
Lula added that “now is the time to move forward with creating alternative payment methods for transactions between our countries.”
While there have been signals that BRICS could start a reserve currency, officials appeared to veer away from this goal when they met in October 2024, said Michael Wan, a senior currency analyst at MUFG Research.
Indian Prime Minister Narendra Modi has said that he would welcome steps toward the financial integration of BRICS countries while Chinese communist regime leader Xi Jinping encouraged member nations to deepen financial and economic cooperation.
“They can go find another sucker Nation. There is no chance that BRICS will replace the U.S. Dollar in International Trade, or anywhere else, and any Country that tries should say hello to Tariffs, and goodbye to America!” Trump wrote in his latest social media post on the subject.
At the time, Russia said that any U.S. attempt to force countries to use the dollar would backfire.
“More and more countries are switching to the use of national currencies in their trade and foreign economic activities,” a Kremlin spokesperson told reporters in December 2024. “If the U.S. uses force, as they say economic force, to compel countries to use the dollar it will further strengthen the trend of switching to national currencies (in international trade).”
Despite concerns over potential de-dollarization, the U.S. dollar continues to serve as the world’s dominant reserve currency, with that dominance further strengthening of late, in part due to a robust U.S. economy, tighter monetary policy, and heightened geopolitical risks
A study by the Atlantic Council’s GeoEconomics Center in 2024 showed the U.S. dollar remains the world’s primary reserve currency, and neither the euro nor the BRICS nations have successfully reduced global reliance on the dollar.
