“100% tariffs” was the impossible, laughable threat prescribed to BRICS, a group of countries who claim to pursue greater global economic balance between world powers. This threat has been given to them not once, but twice by President Donald Trump since his 2024 election win. His evocation of tariff based attacks sustains a U.S. tradition of using the dollar’s pervasive nature to bend countries to his will. But with the absurdity of these threats comes the reality that the US does hold a striking amount of power within its currency.
More realistically, since being inaugurated three months prior, he has initiated, postponed and altered the terms of tariffs on China, Mexico and Canada. Tariffs are taxes on imports from other countries. Trump is implementing them with the intentions of punishing these three countries while also generating tax revenue. There are a few things wrong with this idea, the first being a tariff can only do one of those things at a time– for the tax to actually punish the targeted countries, American companies must buy from other countries instead, which prevents the collection of tax revenue from the tariff. On the other hand, if American companies still buy from the targeted countries, tax revenue is generated, but consumer prices are likely to go up, making life more expensive for most Americans. Either the targeted countries remain unaffected, or U.S. consumers pay the price– with the latter appearing to be the more likely outcome. But beyond fears of high consumer prices, some fear U.S. dollar dominance will falter.
What is meant by “dollar dominance”? This is the phenomenon of the US dollar being the number one currency in the world for trade and financial transactions. Even in transactions between two countries where the US is uninvolved, the dollar is commonly used. The money used for such a transaction is called a reserve currency. The U.S. dollar is the world’s number one reserve currency; nearly 60% of the entire world’s foreign reserves are in US dollars, with the Euro coming in second at only about 20%. Reserve currencies are typically supplied by larger, wealthier countries.
The U.S. dollar’s domination puts it in a prime position for effective economic sanctions for countries they deem fit for punishment, which increasingly become one of its favorite tactics. First launched in 1960, the US targeted Cuba with infamous trade embargos. Today, the US leans on financial sanctions that work because of the pervasiveness of the dollar. In 2018, President Trump “prohibited access to U.S. financial markets by the Venezuelan government” amidst a crisis that caused the country’s inflation rate to reach 130,060% that year. In fact, the US has put about a third of all low income countries under sanctions. This is a strong contributor to high inequality between different global regions, such as North and South America.
A group of large economies that are at the forefront of attempts to reduce the power of the dollar (otherwise known as de-dollarization) is BRICS: Brazil, Russia, India, China, and South Africa. Since 2009, five other countries have become official members, including Egypt and Iran. Most recently, Nigeria, Cuba, and seven other countries have joined the bloc as “partner countries.” Each leader in BRICS seeks to gain more “representation in global organizations” and a more balanced international playing field. They want an alternative finance system to U.S. dominated trade and financial systems, in addition to more trade in currencies other than the dollar. While their interest in de-dollerizing their economies would grant more international economic balance between countries, do these leaders intend to upend the structure of economic and financial markets that influence inequality within their countries? That is unlikely.
The within country inequality of most BRICS bloc countries is high and seems to be growing, mirroring the US. In South Africa, income concentration at the top 10% of the population is 20% percent higher than in the US, which is already about 46%. India ranks third in the number of billionaires it has at 200. Twenty-five years prior in 2000, that number was just 9. That’s 22 times its original amount. In comparison the US has only about tripled in the same amount of time. Inequality is rising rapidly in these BRICS countries. Additionally, the human rights violations of recent additions to the bloc, such as the United Arab Emirates, heightens the question of if BRICS wants international economic balance or just more skin in the game that the U.S plays. Among BRICS members, there seems to be no urgency to improve the quality of life for the average person across the globe.
With BRICS in mind, what do Trump’s tariffs mean for the dollar and the average person? Most predictions point to inflationary effects on American consumers. The targeted countries have retaliated with their own set of tariffs, likely putting a squeeze on consumers in their own countries. Increased weaponization of the dollar with Trump’s tariffs adds further motivation for BRICS to accelerate their pursuit of de-dollarization. However, the creation of a BRICS system that works to improve within-country inequality– and does more than just allow these countries to replace the United States at the top of an oppressive global hierarchy– seems out of reach.
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