The recent comment by US President Elect, Donald Trump, on imposing 100% tariffs against BRICS countries if they plan to bring out an alternative currency to trade has sparked widespread debate. 

While the comment may be perceived as a strategic warning, its practical implementation and long-term consequences remain uncertain. India, a key member of BRICS, appears to be treading cautiously.

While the idea of an alternative currency may seem appealing in principle, it raises several questions. Would such a system genuinely reduce reliance on the dollar, or would it create new dependencies and imbalances?

I think that trading in national currencies or creating an alternative to the US dollar seems unlikely in the near future and will not happen overnight. The reason for this is that 90% of all trades are conducted in US dollars, which remains the preferred currency for both Indian exporters and global importers alike. Although the percentage has declined over the years, the dollar still accounts for more than 58% of the world’s foreign exchange reserves, cementing its status as the preferred global currency. Any alternative would require not only economic alignment among BRICS nations but also the trust of global markets—a task that is easier said than done.

Also, in my opinion, the President-elect will not impose sanctions, as this does not seem to be a viable option. With imports becoming costlier under this arrangement, and a stronger dollar will make U.S. exports more expensive, demand for them in international markets may also decrease.

I believe the realities of global trade and the interconnected nature of economies suggest that any drastic moves against the dollar is unlikely. Thus, any transition away from the dollar is likely to be gradual, requiring careful navigation of international relationships and economic interests. The debate on alternative currencies has been going for some time and it will be interesting to see how global dynamics evolve in the coming years.

I invite your opinions.