President-elect Donald Trump's threat to impose 100% tariffs on BRICS nations if they create an alternative to the U.S. dollar has drawn mixed reactions from leading economists, highlighting tensions over global trade and currency dominance.
What Happened: Milken Institute Chief Economist William Lee suggests Trump's approach reflects his preference for direct bilateral negotiations over multilateral agreements.
"Trump has shown his desire for direct negotiations," Lee said, noting the contrast with President Joe Biden's behind-the-scenes approach to trade deals. Lee emphasized that Trump's tariff threats serve as leverage to drive negotiations, particularly with major trading partners.
However, British economist Dr. Rodney Shakespeare warns that such aggressive tactics could backfire. "Trump thinks he can target BRICS countries individually, but doing this will cause BRICS to act collectively," Shakespeare told Sputnik, suggesting that America's declining economic hegemony could leave it vulnerable in a potential trade war.
Economist Peter Schiff offered a different perspective on X, arguing that BRICS nations are making a poor trade by exchanging goods for U.S. fiat currency, contradicting Trump's assertion that America is being taken advantage of in current trade relationships.
Why It Matters: The debate comes as BRICS, which now includes nine member nations, reportedly attracts interest from 34 additional countries. Russian President Vladimir Putin recently emphasized the bloc's expanding influence and its plans to develop an alternative currency system, potentially challenging dollar supremacy in international trade.
Trump's stance, posted on X, maintains that any move by BRICS to create an alternative currency would face severe economic consequences, including restricted access to U.S. markets. This position sets up a potential confrontation with the growing economic bloc, which represents a significant portion of global GDP and trade volume.