Aditya Vaibhav | The TrickyScribe: As Donald Trump prepares to return to the White House in January 2025, his aggressive trade policies are already creating global economic ripples. A key flashpoint is Trump’s warning of imposing a 100% tariff on BRICS nations—including India—if they proceed with developing a common currency aimed at reducing the US dollar’s dominance. The warning follows an October meeting of BRICS members in Kazan, Russia, where boosting non-dollar transactions was a significant focus.
India’s Economic Stakes and Concerns
India, a strong trade partner of the US, is deeply concerned about Trump’s protectionist stance, which he claims is designed to safeguard American interests. With a diverse export portfolio that includes pharmaceuticals, IT services, and textiles, India could face substantial challenges if tariffs are imposed. Higher costs for Indian exporters could make their products less competitive in the US market.
At the same time, India has cautiously pursued a de-dollarisation strategy, aware of its growing trade relationship with Washington. The bilateral trade between the US and India surpassed $120 billion in FY24, making the US India’s top trading partner.
India’s Position on a BRICS Currency
External Affairs Minister S. Jaishankar has expressed skepticism about the feasibility of a BRICS currency. Highlighting the practical challenges, he emphasized the lack of alignment among BRICS nations in key areas such as fiscal, monetary, and economic policies. Speaking to South Africa-based Mail and Guardian, he noted that nations often question the need for a third currency between them, citing cost, liquidity, and efficiency concerns.
“Countries need enormous alignment in fiscal and monetary policies for a common currency to work,” Jaishankar stated, reflecting India’s cautious approach to the proposal.
Trump’s Tariff Threat and Its Implications
In a fiery statement on Truth Social, Trump declared that any BRICS move toward a common currency would result in harsh consequences. He warned that the US would impose 100% tariffs on BRICS nations and cut off their access to the lucrative American market.
“The idea that BRICS countries are moving away from the dollar while we stand by is over,” Trump wrote. “They will face tariffs and should say goodbye to selling into the wonderful US economy.”
India’s Balancing Act Amid Geopolitical Pressures
India’s reluctance to support a BRICS currency stems from multiple factors, including fears of jeopardizing its economic stability and lucrative trade relationships with Western nations. Additionally, India is wary of China’s growing influence within BRICS and concerns over Beijing’s potential use of the bloc to further its geopolitical agenda.
The US dollar remains critical for global trade, and India’s own financial transactions heavily rely on it. For now, India appears committed to maintaining a balanced foreign policy, prioritizing economic stability and its strategic interests over aligning with initiatives that might undermine the dollar’s dominance.
BRICS vs. US: The Road Ahead
As Trump’s aggressive rhetoric heightens tensions, India faces a delicate balancing act. While de-dollarisation aligns with its long-term goals, the potential fallout from adopting a BRICS currency poses significant risks. With its strong economic performance and strategic partnerships, India must navigate this complex geopolitical landscape carefully to protect its national and economic interests.
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