Trump Declares De-Dollarization Dead—Are Tariffs the Ultimate Weapon?

Donald Trump is full steam ahead on anti-de-dollarization, saying his trade policies have killed de-dollarization and tariffs are forcing countries to think twice before reducing their dependence on the US dollar.

Trump told reporters Thursday that any country that tries to undermine the dollar will face tariffs up to 100%.

He was specifically targeting the BRICS alliance (Brazil, Russia, India, China and South Africa) which has been looking at alternatives to the dollar for trade settlements. His message was clear: any move against the US dollar will be met with economic retaliation.

This isn’t the first time Trump has issued this warning. In November he said countries pursuing de-dollarization should prepare to lose access to the US market and his administration would enforce tariffs as a deterrent.

Are Tariffs a Real Deterrent to De-Dollarization?

While Trump says tariffs are a powerful tool to protect the dollar, economists are divided. Jim Rickards, an economist and de-dollarization expert, says Trump’s remarks are more of a warning shot than an actual policy shift.

“The BRICS bloc is not actively pursuing a new currency,” Rickards said. “Gold is their closest alternative to the dollar but no formal monetary system is in place.”

Despite Trump’s threats, BRICS countries have continued to increase the use of local currencies in trade. Russia and China have significantly increased the volume of transactions in yuan and rubles reducing their dependence on the US dollar. Iran has even openly supported the idea of a BRICS currency if the member states can agree.

So while tariffs may be a short term economic threat, they haven’t stopped countries from looking at alternative financial systems. The long term sustainability of US economic influence through trade restrictions is uncertain especially as geopolitical alliances continue to shift.

How Will This Impact Global Markets?

With Trump positioning himself as the defender of dollar supremacy, markets are bracing for policy changes. If tariffs are imposed on BRICS countries, here are some possible outcomes:

• Trade Wars Escalate: Higher tariffs means more trade tensions and retaliatory actions from affected countries.
• Inflation Rises: Tariff induced disruptions mean higher costs for American consumers and businesses.
• Alternative Alliances Strengthen: Countries impacted by US trade policies will accelerate their work on alternative financial structures.

Trump’s words are loud but the actual impact will be determined by the markets. For now the dollar is still the reserve currency but the diversification push is far from over.

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.