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- Business
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'Brics fading out fast': Trump says can't let 'a little group play games' with dollar dominance
US President Donald Trump mocked the Brics group of nations, describing the economic bloc as a 'little group' that is 'fading away fast' read more Brazil's President Luiz Inacio Lula da Silva (C) speaks during the first plenary session of the BRICS summit in Rio de Janeiro, Brazil. AFP US President Donald Trump on Friday took jabs at the BRICS group, calling the economic body a 'little group' that is 'fading out fast'. While taking potshots at the group of nations, Trump reiterated his earlier warning of imposing a 10 per cent tariff on any nation aligning with the group. Trump's wrath towards the group has been very apparent, with him often accusing the group of having 'anti-American policies'. In his rant against the BRICS, Trump took credit for weakening the group's effort to challenge the dominance of the American dollar. STORY CONTINUES BELOW THIS AD 'There is a little group called Brics, and it is fading out fast. But the BRICS tried and wanted to take over the dollar and the dominance of the dollar and the standard of the dollar. I said that anybody in the BRICS consortium of nations, we are going to tariff you 10 per cent, and they had a meeting the following day. Almost nobody showed up,' the Potus said while talking about how he approaches global economic rivals. 'When I heard about this group of six countries in Brics, I hit them very hard, and if they ever really form in a meaningful way, it will end very quickly," he added. Without taking names of any particular country, Trump said: 'We can never let anyone play games with us.' While summing up his rant, the Potus made it clear that protecting the global reserve status of the US dollar is his administration's highest priority. 'We are not going to let the Dollar slide… If we lost the status of the Dollar as the world's reserve currency, it would be like losing a World War,' he said. Brics denies being 'Anti-American' It is pertinent to note that the BRICS group of nations initially started with Brazil, Russia, India, China and South Africa. Recently, the group expanded its membership, adding countries such as Iran, Saudi Arabia, the United Arab Emirates, Egypt and Ethiopia. What makes the group significant in the international arena is that the collective GDP of BRICS countries has reached over $31 trillion, accounting for approximately 27 per cent of the global GDP. This massive global GDP share makes BRICS one of the most influential economic groups in the world. Amid Trump's push-back, the economic group has frequently denied being ' anti-American'. Meanwhile, Trump has interestingly singled out Brazil by imposing additional penalties, including a 50 per cent tariff on imports starting in August. Trump took the measure, accusing Brazil of committing 'unfair' trade practices, an allegation Brazil has denied. STORY CONTINUES BELOW THIS AD While Brazil has stepped back from pushing for a common currency, the economic bloc is continuing to develop Brics Pay, a cross-border payment system aimed at promoting trade in local currencies. Despite Trump's repeated claims, there has been no evidence to show that BRICS aim to undermine the American dollar. However, the group's relevance came into question after both China's Xi Jinping and Russia's Vladimir Putin decided to skip this year's leaders' summit in Rio de Janeiro, Brazil.
The National
13-07-2025
- Business
- The National
Brics' post-dollar system relies on political trust - but is that possible?
The Brics emerging markets are once again touting their ambition to build a world less dependent on the US dollar. Leading the latest push is a new guarantee fund, to curb investment risk and support financing in the bloc, something discussed at last week's Brics summit in Rio de Janeiro. If formally launched, it will join Brics Pay, the alternative payments system proposed in 2018, to facilitate payments across the bloc in local currencies, and the New Development Bank, launched in 2015 to fund infrastructure and development projects. At first glance, this all might look like the early scaffolding of a new financial order. But closer inspection shows something less dramatic: not the end of dollar dominance, but an attempt to escape its most painful consequences. The motivation is clear. The dollar is not just the world's reserve currency. It is also a powerful lever of US foreign policy. Russia's partial exclusion from the Swift global payments network in early 2022, over its invasion of Ukraine, severely curtailed its access to global trade and finance. Russian banks lost nearly $25 billion in the first half of 2022 alone. Iran faced similar treatment in 2018 and 2012. China's central bank governor Pan Gongsheng recently warned that any currency dominated by a single country is vulnerable to being 'weaponised' during geopolitical conflicts. So the Brics' pitch is not just about moving away from the dollar. It is about building a system the West cannot turn off at will. However, the most eye-catching idea – creating a common Brics currency – is a non-starter. A joint currency implies a level of political trust and economic co-ordination that does not exist in this bloc. Even within the eurozone, managing a single currency across divergent economies has proven difficult. Now imagine doing that across Brics, a group with far deeper divisions. It brings together authoritarian states like China and Russia with democracies like Brazil and India, whose political systems and policy priorities often diverge sharply. Even China, the bloc's most powerful member and world's second largest economy, has shown little public enthusiasm for a shared Brics currency. Its focus has been on expanding use of the renminbi, as part of its broader push for a 'multipolar' currency system. The more serious effort – and the more plausible one – is payments infrastructure. Here, the Brics nations are making headway. Swift is overseen by the central banks of the G10 countries, along with the European Central Bank. Nations under sanctions can be excluded from it. That makes it a red flag for China and others who worry they could be next. Brics Pay is an attempt to address that. Instead of clearing payments through western banks, member countries can transact directly with each other in local currencies. This does not replace the dollar outright. But it does create space for more bilateral trade that avoids it. And that has real consequences. When two foreign companies with different currencies trade in US dollars, both take on currency risk, since neither is using its own currency. To manage that risk, companies often hedge through local banks, which in turn require access to dollar liquidity. That creates sustained demand for US dollars, prompting central banks to hold large dollar reserves to support their financial systems. But if Brics economies conduct more trade in local currencies – say, rupees for Indian goods or renminbi for Chinese exports – only one side typically bears the currency risk. This reduces the need for hedging in dollars and, over time, can lower the pressure on central banks to maintain such large greenback reserves. This shift is already under way at the margins. China has steadily reduced its holdings of US Treasury bonds and is actively encouraging trade partners to settle transactions in renminbi. Some sovereign wealth funds in the global south are beginning to explore non-dollar assets. Egypt, for example, has issued 'panda bonds' denominated in Chinese renminbi as part of its broader diversification strategy. The changes are incremental, but they add up. What the Brics offer is not a replacement of the dollar but an escape hatch, particularly for members that fear being locked out of global finance. And with the return of US President Donald Trump and his erratic policymaking, that fear is growing. Mr Trump recently passed a tax-and-spending package expected to push public debt beyond $3 trillion over the long term, undermining confidence in America's fiscal stewardship. At the same time, the dollar has had its weakest start to a year since 1973, falling more than 10 per cent against a basket of major currencies, a slide driven in part by Mr Trump's trade and fiscal agenda. In contrast, trade among global south nations has expanded sharply over the past two decades, rising from $2.3 trillion in 2007 to $5.6 trillion in 2023. This long-term growth has laid the groundwork for more local currency trade and a gradual move away from dollar dependence. While momentum has slowed in early 2025, the structural shift remains intact. Still, challenges remain. Trust among members is limited. The financial muscle of Brics institutions is modest. Beyond payments infrastructure, there is little evidence of serious integration. Without a common legal framework, shared monetary policy, or deep capital markets, the group will struggle to rival the dollar on core metrics like liquidity, convertibility and investor confidence. So what is realistic? Expect progress on alternative payments. Brics Pay and similar platforms will likely grow in use, especially for trade between members. The New Development Bank may increase regional lending, especially for infrastructure and green projects, areas where China is already investing heavily. But the dream of a unified Brics currency is exactly that: a dream. Economically unworkable, politically divisive, and lacking the institutional foundations it would require.
