Geopolitical Economy Report
Countries across the planet are seeking alternatives to the US-dominated financial system. However, former President Donald Trump has pledged that, if he returns to the White House, he will punish nations that de-dollarize.
“We will keep the US dollar as the world’s reserve currency”, Trump promised at a campaign rally in Mosinee, Wisconsin on September 7, 2024.
“It is currently under major siege. Many countries are leaving the dollar”, the Republican presidential candidate lamented.
“They’re not going to leave the dollar with me”, Trump insisted. “I’ll say, ‘You leave the dollar, you’re not doing business with the United States, because we’re going to put 100% tariff on your goods’”.
Trump vows: “I would not allow countries to go off the dollar”
Trump made similar remarks in an interview on CNBC’s “Squawk Box” on March 11, 2024.
“I’m very much a traditionalist. I like staying with the dollar”, he said.
“I hate when countries go off the dollar. I would not allow countries to go off the dollar”, the presidential candidate pledged.
If the United States lost its status as the issuer of the global reserve currency, he argued, “that will be like losing a revolutionary war. That will be, that will be a hit to our country, just like losing a war. And we can’t let that happen”
“Too many countries now are fighting to get off the dollar”, Trump complained.
Bloomberg reported in April that Trump and his economic advisers are crafting policies aimed at punishing countries that de-dollarize, with threats of tariffs and sanctions.
“Discussions include penalties for allies or adversaries who seek active ways to engage in bilateral trade in currencies other than the dollar — with options including export controls, currency manipulation charges and tariffs”, Bloomberg wrote.
Trump already threatened blanket tariffs of “more than” 60% on all Chinese goods.
BRICS pushes de-dollarization
The global de-dollarization drive has received a big boost from the BRICS bloc, of Brazil, Russia, China, India, and South Africa.
China and Russia have de-dollarized more than 90% of their bilateral trade.
China and Brazil signed a deal to de-dollarize their bilateral trade.
Russia and Iran pledged to de-dollarize their bilateral trade.
Even the Association of Southeast Asian Nations (ASEAN) has made agreements to de-dollarize regional trade.
All of these nations are instead using their own currencies in international trade, bypassing the dollar.
China is the largest trading partner of the majority of countries on Earth. In just two decades, China’s share of global trade more than tripled, from just 4% in 2001 to over 14% in 2021, according to S&P Global.
China, which is the world’s largest economy, when its GDP is measured at purchasing power parity (PPP), has also rapidly de-dollarized its international trade.
The United Arab Emirates has sold China gas in exchange for RMB, and Saudi Arabia’s minister of industry even said the oil-producing Gulf nation would be “open” to selling crude in yuan.
According to the IMF, as of 2023, slightly over half of China’s foreign receipts and payments are conducted in its own currency, the renminbi (also known as the yuan) — a staggering rise in just two decades.
During a trip to China in April 2023, Brazil’s left-wing President Lula da Silva visited the headquarters of the BRICS New Development Bank (NDB), which is located in Shanghai.
The leader of the NDB is the former president of Brazil, Dilma Rousseff, from Lula’s leftist Workers’ Party. She has vowed to de-dollarize the NDB’s lending, offering loans in the local currencies of members.
In a fiery speech at the BRICS bank, Lula declared, “Every night I ask myself why all countries have to base their trade on the dollar”.
“Why can’t we do trade based on our own currencies?” asked the Brazilian leader.
