When it comes to making statements with significant impact, very few can take the world by storm the way President Donald Trump can. His recent announcement to the BRICS nation has taken over the media, as he threatened to impose a 100% tariff should they create a new currency to rival the US dollar.
Donald Trump speaking with attendees at a “Chase the Vote” rally at Dream City Church in Phoenix, Arizona. June 6, 2024. Image Courtesy: Gage Skidmore
These statements have proven to be a source of stress for US citizens and neighboring countries that could be affected. If put into effect, it can mark instability in the population, making import and export more challenging. We’ll learn more about how the latest announcement can affect other countries.
What Triggered the Tariff Threat?
Over the past few years, BRICS countries have attempted different ways to become less dependent on the US dollar, which gives the United States an advantage in trades. After Russian President Vladimir Putin made a call for a new international payment, saying that it is “used as a weapon,” a new idea came to the surface. After discussions with Brazilian President Luiz Inácio Lula da Silva, it was proposed that a new common currency be implemented in South America.
Using a new currency would be difficult as the US dollar holds significant power. Also, the dollar still marks 58% of the FOREX reserves. This prompted President Donald Trump to offer a response to these discussions in an attempt to keep the dollar at a stronger point.
“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. 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 US Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful US Economy”
It’s difficult to say whether or not these tariffs would be implemented. Trump allies have suggested that it is merely a tactic of negotiation, meant more to trigger negotiations. However, should it follow through, Trump may intend to place these taxes on all goods entering the United States as a way to strengthen the US economy.
An Attempt at Negotiation from China
In response to the tariff announcement, China has consistently called for negotiations, as they have learned plenty of lessons from the previous trade war. The possibility that it could destabilize both countries is high, even if the 10% tariff in China is relatively small compared to others. Despite being one of the most powerful countries, China’s economy is still in relatively bad shape, which is why these taxes could deal even more damage.
As a significant portion of its profits comes from exports, China wishes to avoid another trade war, which could increase the costs of goods in both countries. While it is not yet certain how far these threats will escalate, Trump’s first official day in the administration office will likely begin with numerous conversations on the matter.
How Other Countries Would be Affected
Trump’s threat targeted BRICS countries (Brazil, Russia, India, China, and South Africa), but such a tariff could also affect other nations. For instance, Australia and China have consistently growing economic ties, with commodity trades growing by up to 10% yearly. Should China’s economy weaken even further due to the new tariff, the demand for goods from Australia could decline and indirectly affect their economy with reduced revenues, price instability resulting in higher costs and a potential slowdown in GDP growth.
“I think when it comes to inflation specifically, the worst is behind us”
The Hon Dr Jim Chalmers MP Australian Labor Party Treasurer October 20, 2024. Image Courtesy: DTH89
The impact on Europe is also significant, as the incoming president promised new taxes. Unless European countries purchased more gas and oil from the United States, Trump threatened with a tariff on all imports by up to 20%. This is all part of his “tariffs all the way” plan, which he made clear through his post on Truth Social.
The Impact on the US Economy and Prices of Goods
While these taxes were proposed as a way to strengthen the economy of the US, they could have a significant impact on American citizens, too. As BRICS countries face higher taxes, there is a good chance that prices of goods will rise as well to make up for the losses. In the end, US citizens could pay more for imported products than they used to.
Prices of steel and other similar imported metals can also increase, especially as China is one of the main suppliers. On the other hand, the potential tariffs could decrease competition for industries based in the US, such as steel and aluminum.
The Line in the Sand
The administration sees President Trump’s proposed tariffs as a way to increase the country’s power, focusing more on protectionism rather than organization. That said, it’s difficult to say how the rest of the world can handle the economic fallout, given that they’re strongly interconnected through trade. With tensions rising, the world is looking forward to seeing how negotiations will shift these decisions, avoiding a potential conflict.
juni 
OPINION |
When it comes to making statements with significant impact, very few can take the world by storm the way President Donald Trump can. His recent announcement to the BRICS nation has taken over the media, as he threatened to impose a 100% tariff should they create a new currency to rival the US dollar.
June 6, 2024. Image Courtesy: Gage Skidmore
These statements have proven to be a source of stress for US citizens and neighboring countries that could be affected. If put into effect, it can mark instability in the population, making import and export more challenging. We’ll learn more about how the latest announcement can affect other countries.
What Triggered the Tariff Threat?
Over the past few years, BRICS countries have attempted different ways to become less dependent on the US dollar, which gives the United States an advantage in trades. After Russian President Vladimir Putin made a call for a new international payment, saying that it is “used as a weapon,” a new idea came to the surface. After discussions with Brazilian President Luiz Inácio Lula da Silva, it was proposed that a new common currency be implemented in South America.
Using a new currency would be difficult as the US dollar holds significant power. Also, the dollar still marks 58% of the FOREX reserves. This prompted President Donald Trump to offer a response to these discussions in an attempt to keep the dollar at a stronger point.
It’s difficult to say whether or not these tariffs would be implemented. Trump allies have suggested that it is merely a tactic of negotiation, meant more to trigger negotiations. However, should it follow through, Trump may intend to place these taxes on all goods entering the United States as a way to strengthen the US economy.
An Attempt at Negotiation from China
In response to the tariff announcement, China has consistently called for negotiations, as they have learned plenty of lessons from the previous trade war. The possibility that it could destabilize both countries is high, even if the 10% tariff in China is relatively small compared to others. Despite being one of the most powerful countries, China’s economy is still in relatively bad shape, which is why these taxes could deal even more damage.
As a significant portion of its profits comes from exports, China wishes to avoid another trade war, which could increase the costs of goods in both countries. While it is not yet certain how far these threats will escalate, Trump’s first official day in the administration office will likely begin with numerous conversations on the matter.
How Other Countries Would be Affected
Trump’s threat targeted BRICS countries (Brazil, Russia, India, China, and South Africa), but such a tariff could also affect other nations. For instance, Australia and China have consistently growing economic ties, with commodity trades growing by up to 10% yearly. Should China’s economy weaken even further due to the new tariff, the demand for goods from Australia could decline and indirectly affect their economy with reduced revenues, price instability resulting in higher costs and a potential slowdown in GDP growth.
“I think when it comes to inflation specifically, the worst is behind us”
The Hon Dr Jim Chalmers MP
Australian Labor Party Treasurer
October 20, 2024.
Image Courtesy: DTH89
The impact on Europe is also significant, as the incoming president promised new taxes. Unless European countries purchased more gas and oil from the United States, Trump threatened with a tariff on all imports by up to 20%. This is all part of his “tariffs all the way” plan, which he made clear through his post on Truth Social.
The Impact on the US Economy and Prices of Goods
While these taxes were proposed as a way to strengthen the economy of the US, they could have a significant impact on American citizens, too. As BRICS countries face higher taxes, there is a good chance that prices of goods will rise as well to make up for the losses. In the end, US citizens could pay more for imported products than they used to.
Prices of steel and other similar imported metals can also increase, especially as China is one of the main suppliers. On the other hand, the potential tariffs could decrease competition for industries based in the US, such as steel and aluminum.
The Line in the Sand
The administration sees President Trump’s proposed tariffs as a way to increase the country’s power, focusing more on protectionism rather than organization. That said, it’s difficult to say how the rest of the world can handle the economic fallout, given that they’re strongly interconnected through trade. With tensions rising, the world is looking forward to seeing how negotiations will shift these decisions, avoiding a potential conflict.
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