For years, BRICS members have hinted at plans to shift away from the U.S. dollar in international trade. While the proposals have varied, a key one has been the creation of a new BRICS currency to replace the USD. However, the new U.S. president, Donald Trump, has vowed he won’t let this happen, and South Africa has already publicly retreated.
Trump took to social media to warn BRICS members of far-reaching repercussions if they proceed with their de-dollarization plans. Originally a bloc of five countries—Brazil, Russia, India, China and South Africa—the BRICS has since expanded to include Iran, Ethiopia and the UAE, with over three dozen others applying to join.
“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 U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” Trump warned, pledging to prevent the bloc from replacing the USD as the global currency.
The warning has already had the impact the Republican president envisioned. South Africa, one of the original BRICS members, has publicly distanced itself from any plans to create a BRICS currency or de-dollarizing. The country’s Department of International Relations and Cooperation (DIRCO) attributed this “incorrect narrative” to misinformation and fake news.
“Instead, South Africa supports the increased use of national currencies in international trade and financial transactions to mitigate the impact of foreign exchange fluctuations, rather than focusing on de-dollarisation,” added DIRCO, the country’s foreign affairs ministry.
100% tariffs from the American government would be devastating for South Africa. The U.S. is one of its main trading partners; in October, data from the country’s tax agency showed that only China accounted for more exports from South Africa than America’s 7%. South Africa is also one of the 32 African nations that are members of the African Growth and Opportunity Act (AGOA), which gives duty-free access to the U.S. market for a wide range of products.
It’s, therefore, no surprise that South Africa quickly distanced itself from the anti-dollar campaign. In a separate response, Finance Minister Enoch Godongwana also dismissed the claims.
“To my knowledge, there has never been a discussion about a BRICS currency. It does not exist,” he said.
Godongwana dug down on the assertion that BRICS has been working on strengthening the trading in local currencies.
Despite South Africa’s denial, previous statements from other leaders of BRICS nations have revealed they are exploring alternate payment systems, even if they won’t involve a new currency. Blockchain, digital currencies, and stablecoins are at the top of the agenda. Inevitably, questions have been raised over whether the ongoing mBridge CBDC trial would evolve into a BRICS payment system. While the members have denied the links, the U.S.-allied Bank for International Settlements (BIS) recently exited the mBridge trial in a thinly-veiled confirmation of the links.
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