The yuan has been challenging the dollar for some time. It recently overtook the euro as the second most used currency for international trade and Trump is appealing to protectionism in his campaign, seeking to combat this advance.
Donald Trump promised sanctions to countries that stop using the dollar for the international trade. “If you leave the dollar, You will not do business with the United States, because we will put a 100% tariff on your products”the Republican presidential candidate said at a rally in the battleground state of Wisconsin.
The statement comes after months of discussions between Trump and his economic advisers on ways to penalize allies or adversaries which are actively seeking ways to engage in bilateral trade in currencies other than the dollar. This is in contrast to the position of the BRICS, which are seeking new alternatives to the dollar and challenging American hegemony.
Options have included export controls, currency manipulation charges and tariffs, they previously told Bloomberg News. people familiar with the matter.
Trump, who has long embraced protectionist trade policies, said the dollar The dollar has been “under great siege” for eight years. China, India, Brazil, Russia and South Africa discussed de-dollarization at a summit last year. Trump, by contrast, has said he wants the greenback to remain the world’s reserve currency.
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The dollar decreased its participation in international trade
Although the dollar’s dominance has declined in recent decades, The US currency still accounted for 59% of official foreign exchange reserves in the first quarter of 2024, with the euro in second place with almost 20%, according to the International Monetary Fund (IMF).
Recently, the Chinese Yuan overtook the euro as the second trading currency after the dollar. The advance is closely linked to a broader strategy of the countries that make up the BRICS group (Brazil, Russia, India, China, South Africa), which was expanded to include more countries, and is a political and economic forum for emerging states seeking an alternative space for debate to the G7 (Group of Seven – Germany, Canada, the United States, France, Italy, Japan and the United Kingdom).
Thus, the group of the BRICS seek to reduce dependence on US dollar and the euro at a commercial level and find in the yuan a third way that can be consolidated and be useful.
Source: Ambito
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