Where India stands as Trump threatens 100% tariff on BRICS if dollar is dumped

Trump threatens over BRICS plans of de-dollarisation.

US President-elect Donald Trump on Saturday issued a warning to BRICS nations, threatening a 100 percent tariff on goods, if they pursued plans to drop the dollar as a primary trading currency.

The nine-member BRICS group, which includes India, Russia, China, Brazil, and South Africa, was called upon to commit to avoiding the creation of an alternative currency.

“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. Otherwise, they will face 100 percent tariffs and can expect to say goodbye to selling into the wonderful US economy,” Trump stated.

India’s Stance on Dollar Usage

India is a crucial member of BRICS and enjoys strong trade relationship with the United States. India also recently reiterated its position against de-dollarisation.

External Affairs Minister S Jaishankar clarified India's stance during his October 1 appearance at the Carnegie Endowment for International Peace in Washington.

“You have us confused with someone else. We have never actively targeted the dollar. That’s not part of our economic, political, or strategic policy. Some others may have, but not us,” Jaishankar said, responding to a query on de-dollarisation.

He emphasised that India’s interest in alternative currencies stems from practical concerns. “We often deal with trade partners who lack dollar reserves. In such cases, we explore settlement mechanisms that work for both sides. There’s no malicious intent against the dollar. It’s purely about conducting business efficiently,” he added.

Jaishankar pointed out that US policies occasionally complicate dollar transactions. “Sometimes, trading in dollars becomes challenging due to US sanctions or other measures. In such cases, we look for workarounds to maintain trade flows,” he explained.

Global and Domestic Reactions

Trump’s warning has drawn criticism from several quarters. The Global Trade Research Initiative (GTRI), an economic think tank, called the proposed tariffs unrealistic. “Imposing 100 per cent tariffs would not only disrupt global trade but also hurt US consumers by driving up import prices. It could provoke retaliation from key trading partners, including BRICS nations,” it said in a statement.

The think tank advised India to focus on developing a robust local currency trading system to minimise reliance on the dollar.

A Business Standard report suggested that the Indian government is preparing for potential challenges arising from Trump’s protectionist trade policies. Senior officials in key ministries are reportedly reviewing his recent speeches and past policy actions to anticipate shifts in US trade dynamics. “We don’t know what the outcome will be, as Trump is known for his unpredictability. However, we want to be prepared,” a government official was quoted as saying in the report.

Implications for India-US Trade

Observers note that while India remains committed to global trade norms, it must carefully navigate these developments to protect its economic interests.