The issue concerning the so-called BRICS and the US dollar has been going on for some time, and now with the Trump presidency, a new phase seems to have opened.
With the democratic presidency of Joe Biden, in fact, the BRICS had pushed as much as possible on the path of de-dollarization, even if concretely they had not achieved much.
With the Republican presidency of Donald Trump, the difficulties for the BRICS seem to have increased, so much so that some member countries are deciding to abandon the idea of de-dollarizing, at least for now.
The BRICS and the dollar: Trump tries to regain trust
BRICS is an acronym that stands for Brazil, Russia, India, China, and South Africa.
It is an intergovernmental organization established in 2009 among Brazil, Russia, India, and China, to which South Africa was added two years later.
Over the years, however, other countries have also joined, so much so that since last year the organization has changed its name to BRICS+.
Now, in addition to the founding countries, Egypt, United Arab Emirates, Ethiopia, Iran, and Indonesia are also part of this organization.
Initially, the organization of the BRICS aimed to establish an autonomous financial structure as an alternative to that of the International Monetary Fund (IMF), dominated by the USA. Therefore, from the beginning, the main purpose, besides being political, was also purely financial.
In fact, since 2009 they proposed the creation of a new currency to be used as a global reserve instead of the US dollar, which is curiously the same year in which Bitcoin was born. Initially, however, they were not yet explicitly talking about de-dollarization.
In 2022 this proposal became a concrete project, with the initiative to create a new global currency based on a basket of other currencies, with the specific purpose of challenging the supremacy of the US dollar. At the time, Joe Biden was president, and interestingly it is also the year in which Russia attacked Ukraine.
De-dollarizzazione
To tell the truth, however, a real de-dollarizzazione has never really started yet.
Indeed, with the arrival of Donald Trump to the USA presidency, the dollar has returned to being very strong.
In reality, the current value of the Dollar Index, about 108 points, is well below the peak of 113 points in 2022. Moreover, a strong dollar helps other countries export goods to the USA, which remains the largest market globally.
It is, however, possible that the underlying idea is to create a new strong currency that allows the States belonging to the BRICS to increase their purchasing power towards non-BRICS countries.
So if on one hand de-dollarization has been an objective circulating for fifteen years now, and on the other hand it has been three years since the BRICS project for the creation of a global currency alternative to the US dollar started, in the end, for now, the results achieved by these initiatives have been really scarce, not to say negligible.
Trump against the BRICS
Since Donald Trump became president, the Dollar Index has risen from 103 to 110 points, and then dropped back to 108.
Previously, however, it had even been at 113 during the peak of 2022 that occurred while President Biden was still in office, although it later fell to 100 points.
It is important to remember that historically the values around which the Dollar Index has fluctuated for decades are precisely these.
In other words, net of the volatility of the Dollar Index, it has been thirty years that the strength of the US dollar has remained substantially unchanged in the long term at a global level.
In light of this, the BRICS initiative for de-dollarization currently seems to have very little chance of success, and with the election of Trump, it now seems even less likely.
For example, India has long since effectively given up on de.dollarization, and recently Indonesia has also started to align itself among the nations not opposed to the use of the dollar for international transactions.
In the end, the only two nations firmly opposed to the use of the US dollar seem to be China and Russia.
The decline of the Dollar Index
However, there is speculation that in the end it might be advantageous for Donald Trump to have a decrease in the strength of the dollar.
The key point is the trade war that is being waged against those countries that export a lot to the USA.
First of all, it must be said that the trade balance with foreign countries of the USA is heavily unbalanced, in the current state, because the country imports much more than it exports.
Furthermore, it should be added that a strong dollar greatly helps imports, but in fact depresses exports.
In the short term, Trump is trying to tackle the problem by applying tariffs on incoming goods, but this inevitably generates inflation, and the USA at this moment cannot afford an increase in inflation.
Therefore, in the medium/long term, it would be advantageous for Trump to remove tariffs, or at least not add more, and instead promote exports with a weak dollar, which would also disadvantage imports.
For now, however, the tariffs are having the opposite effect on the Dollar Index, but hypotheses are beginning to circulate that from March things could change, and the US dollar might perhaps start to weaken.
Source: https://en.cryptonomist.ch/2025/02/11/donald-trump-is-convincing-the-brics-not-to-abandon-the-dollar/