Incoming President-elect Donald Trump issued a new tariff threat over the weekend, which this time was levelled against countries seeking to find US dollar alternatives. His last administration saw most of the anti-trade rhetoric and tariffs directed at China, but this time around, it seems to be most of the world. Mr Trump said that “the idea that BRICS nations are trying to move away from the dollar while we stand by and watch is over”. BRICS countries comprise Brazil, Russia, India, China, South Africa – but his comments also included Egypt, Ethiopia, Iran, and the United Arab Emirates. Collectively, these countries account for well over half the global population.
Trump emphasised that “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 or, they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US Economy.”
Trump’s stance on this issue could actually backfire – and I think this points to the US dollar not being stronger on Monday. This is not good policy, it will only exacerbate a move away from the greenback in my view.
Angus
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Chart Source: Thomson Reuters
