Donald Trump’s recent tariff threats appear to be due, at least in part, to blockchain-based new entrants into the world of influential global financial messaging.
The president-elect’s move was made public in a post Saturday afternoon in which he pledged to impose 100% tariffs on countries seeking to leave the dollar.
“Any country that tries should say goodbye to America,” he wrote.
The target was an organization called BRICS, which currently includes 10 countries and is led by China and Russia, enemies of the West.
One new product appears to be a major stumbling block.
“The immediate cause of President Trump’s threat is the development of BRICS Pay,” American Action Forum Chairman Douglas Holtz-Eakin said in a Monday morning memo.
BRICS Pay is a new initiative by groups, specifically the Society for World Interbank Financial Telecommunication (SWIFT), to provide an alternative to dollar-dominated networks using digital payments and QR code technology.
President-elect Donald Trump is currently visiting Washington DC in preparation for his inauguration as president next year. (Alison Robert/Pool/AFP via Getty Images) ·Alison Robert via Getty Images
President Trump’s post immediately raised concerns about a complex trade war that could span five continents, making it a new hot topic of negotiations between the Trump transition team and foreign leaders in the coming months. It will be.
A Kremlin spokesman quickly responded on Monday that Trump’s actions would backfire, adding that the dollar was already falling.
BRICS’ paid website promises, “Today, we begin to build a new, fair and decentralized financial system for the future,” pledging to create a new, “new global financial and payments architecture.” We are promoting our initiatives.
The group aims to offer not only traditional bank-to-bank connections, but also new digital means of sending money, as part of an overall effort to further enable cross-border payments without using the dollar. I am.
Our ongoing goal is to provide a comprehensive online wallet that allows citizens and businesses in these countries to make payments worldwide using their national currencies.
The system was officially launched in October this year as a direct challenge to SWIFT, the Belgium-based system that currently dominates banking connections around the world and is dominated by the dollar.
It is largely thanks to the SWIFT system that 88% of foreign exchange transactions now involve the dollar, even if there is no American on one side of the transaction.
Society for World Interbank Financial Telecommunications (SWIFT) logo seen in Hong Kong in 2022 (Getty Images) ·NurPhoto (from Getty Images)
The rivals’ recent announcements, which came after a BRICS business forum in Russia, could have huge implications for President Vladimir Putin and his compatriots, who have been largely locked out of the SWIFT system since the 2022 invasion of Ukraine. There is sex.
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Indeed, the SWIFT network has gained some prominence in recent years as a means for Western countries to impose economic sanctions not only on Russia but also on other adversaries of the West.
The press release announcing the BRICS Pay initiative included a notable early goal: allowing foreigners to use Visa and Mastercard in Russia.
Other coalition members have long been critical of the dollar for other reasons, with Beijing saying its dominance is “the main cause of global economic instability and uncertainty.”
BRICS was founded in 2009 by Brazil, Russia, India, China, and South Africa. It has recently expanded to include Iran, Egypt, Ethiopia, and the United Arab Emirates. Saudi Arabia has also been invited to participate.
The group, renamed BRICS+, says it now accounts for more than a third of the planet’s area, nearly a quarter of exports and 45.2% of the population.
Türkiye, Azerbaijan and Malaysia are also reportedly applying to join.
The bigger threat from BRICS is that this informal coalition could establish its own currency, like the euro, to directly challenge the dollar.
But experts say this is a vague concept.
This is still just an idea, and Capital Economics wrote earlier this year that “BRICS currencies are not a viable challenger to the dollar, whether explicitly committed to or not.”
The Atlantic Council model, which tracks the dollar’s position and analyzes the efforts of BRICS, concludes that “the dollar’s role as the world’s major reserve currency is secure in the short to medium term.”
And the idea of an entirely new currency appears to have been downplayed for now, with Kremlin spokesman Dmitry Peskov telling reporters on Monday in response to Trump’s threat that “more and more countries are starting to trade and “We are switching to using our national currency in economic activities.” ”
Perhaps the more immediate question is whether BRICS Pay will be able to gain a foothold in the coming years and advance the larger “de-dollarization” trend that President-elect Trump is clearly trying to thwart.
At the BRICS Summit held in Kazan, Russia in October, Chinese President Xi Jinping and Russian President Vladimir Putin, front row center, prepare for a group photo with participants of the BRICS+ meeting. (Getty Images) ·Contributor (Getty Images)
“We demand from these countries a commitment not to create a new BRICS currency or support any other currency to replace the mighty US dollar. “We should expect to say goodbye to sales in the economy,” Trump wrote in the post.
What remains to be seen is how President Trump, with his seemingly successful recent tariff threats against Mexico and Canada, will jump-start talks with these countries and avoid the need to make his threats a reality. The question is whether or not you can make it.
He recently pledged to impose a 25% tariff on everything imported from Mexico and Canada to encourage them to do more to stem the flow of illegal immigration and drugs.
The measure had immediate effect, and shortly after, President Trump spoke by phone with Mexican President Claudia Sheinbaum and visited Canadian Prime Minister Justin Trudeau over dinner at Mar-a-Lago in Florida. Negotiations have begun.
However, it remains to be seen whether this latest threat to a wider range of countries will have similar consequences.
“What constitutes a satisfactory ‘commitment’ remains unclear, and the authority for such tariffs to be imposed remains unclear,” Holtz-Eakin said Monday.
“So it’s just talk for now.”
Ben Werschkul is Yahoo Finance’s Washington correspondent.
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