Trump’s 100% tariff threat unrealistic; India should focus on local currency trading: GTRI

The Global Trade Research Initiative (GTRI) has deemed US President-elect Donald Trump’s threat to impose 100% customs duties on BRICS countries unrealistic. Instead, GTRI suggests India should prioritize developing a functional local currency trading system.

BRICS, established in 2009, includes South Africa, Iran, Egypt, Ethiopia, and the UAE, alongside India. Some members, particularly Russia and China, have been exploring alternatives to the US dollar, including a potential BRICS currency. However, India has not actively participated in these discussions.

On Saturday, Trump warned BRICS nations against adopting a BRICS currency, threatening significant tariffs.

GTRI founder Ajay Srivastava stated that such tariffs would primarily harm US consumers by driving up import prices, disrupting global trade, and inviting retaliation from major trade partners. He emphasized that Trump’s threat is more symbolic than practical.

“For India, the prudent approach is to focus on making local currency trading workable by establishing a transparent and open currency exchange,” Srivastava said. He added that India's best interests lie neither in dominating the US dollar nor fully adopting a BRICS currency at this stage.

By enhancing its financial infrastructure, India can better navigate the evolving global trade landscape. Srivastava noted that threatening sovereign nations undermines diplomatic relations and overlooks the multipolar nature of today's world.

“No single country, including the US, can unilaterally dictate global economic policies without facing repercussions,” he said. Countries have the right to make decisions in their best interest, especially when current systems have been used against them.

While the US dollar accounts for over 90% of global trade transactions, it is not the only currency in international use. Other currencies like the Japanese yen, the euro, and the British pound also play crucial roles, and the US has not objected to their usage, GTRI noted.

The proposed BRICS currency aims to facilitate trade among member countries and reduce dependence on a single currency. GTRI pointed out that US actions, such as leveraging its influence over global financial systems to impose unilateral sanctions, have driven many countries to seek alternatives to the dollar.

Imposing a 100% tariff on BRICS countries could economically backfire. Such tariffs might disrupt some aspects of global trade but would ultimately harm the US the most. Imports into the US would likely shift to third countries, increasing costs for American consumers without reviving domestic manufacturing jobs.

GTRI added that the US has become less competitive in producing labor-intensive goods due to higher production costs, and tariffs are unlikely to reverse this trend.