Trump Threatens to Impose 100% Tariff on Countries That Plan to Take Part in the Dedollarization Movement

• At a campaign rally in Wisconsin, Trump threatened to impose a 100% tariff on countries that are planning to move away from the dollar.
• In the last few years, the de-dollarization movement has gained a lot of traction, thanks to the BRICS.
• However, imposing a 100% tariff will be equally disastrous for the US economy and would lead to a loss in GDP, increased inflation, and mass job cuts.

Donald Trump is a threat to countries planning to move away from using dollars. At a campaign rally in Wisconsin, he said that such countries would face a 100% tariff on their goods. This is his latest effort to put a stop to the de-dollarization movement.

For those who don't know, the de-dollarization movement, which was started by the BRICS countries including Brazil, Russia, India, China, and South Africa, is a process of reducing global dependence on the US dollar for financial transactions.

As a result of this movement, the dominance of dollars has certainly reduced over the years. But it still held 59% of official foreign exchange reserves in the first quarter of 2024.

Trump obviously wants the US dollar to remain the primary reserve currency and is taking necessary steps to ensure it. According to sources familiar with the matter, he has been in talks with economic advisers on what can be done to prevent de-dollarization and they came up with a number of suggestions such as export controls, currency manipulation charges, and tariffs.

What Could Be the Consequence of These Tariffs?

A 100% tariff is no joke. If Trump really follows through with his promise, the price of goods imported from these countries will skyrocket.

• Businesses relying on foreign imports will have the toughest time. A regular $800 product will then cost $1500 and the consumers will have to pay the price.
• Not just that, it could also increase inflation by 0.75% and further weaken the economy.
• Also, the countries that will be hit by the 100% tariff might retaliate by imposing a 100% tariff on US exports as well. This would lead to a full-blown trade war.
• The retaliation will also hit the US's GDP, reducing it by 0.05%. And in the future, there could be an additional dip of 0.2% to 0.8%.
• At least 27,000 jobs will be destroyed in the process.

These are just the short-term consequences. The long-term consequences could be worse for the US. For starters, it can accelerate the de-dollarization movement. Countries that are tired of the US always trying to get its way might quickly move away from the dollar.

And let's not forget that the US needs the BRICS countries just as much as they need it. Wondering why? Let's take a look at the trade numbers from 2023:

The US traded:

• $254.4 billion with China
• $100.4 billion with India
• $58.3 billion with Brazil
• $48.2 billion with Russia
• $21.4 billion with South Africa

So if both sides put on 100% tariff, these numbers will come crashing down and hurt everyone's economy.

Has the BRICS Responded to the Threat?

The BRICS is yet to respond to the threat but they already have plans in place that could destabilize the US economy.

Out of the main members, China and Russia have already started doing some of their business in local currencies. Brazil and India are planning to follow suit.

This direct threat from Trump might also help them gain the cooperation of other nations who might be tempted to move away from the dollar so that the US can no longer misuse its power to threaten them.

What Does This Mean for Trump?

By now it's clear that making this threat wasn't a wise decision. Now, Wisconsin (where the campaign was held) is critical for both Harris and Trump.

According to a poll released last week, Harris is leading by 8 percentage points here and Trump is trying to keep up. So if the voters of Wisconsin figure out how problematic his threat is, it won't be good for his campaign.

The post Trump Threatens to Impose 100% Tariff on Countries That Plan to Take Part in the Dedollarization Movement appeared first on The Tech Report.