As Donald Trump prepares to return to the White House in January 2025, his stance on trade and global economics is already sending shockwaves worldwide. One of his latest and boldest declarations is the threat of imposing 100% tariffs on BRICS nations, including India, should they pursue a common BRICS currency to challenge the dominance of the US dollar. The idea of de-dollarisation, long discussed within BRICS, presents a significant geopolitical shift, and Trump’s aggressive response underscores the stakes.

For India, the situation is complex. On one hand, the country has shown interest in reducing reliance on the US dollar in global trade. On the other, it faces a challenging reality: the United States is now India’s largest trading partner, with bilateral trade exceeding $120 billion in FY24. This economic interdependence complicates India’s position as it weighs its options amid rising global tensions.

Donald Trump, known for his protectionist policies during his first presidency, is doubling down on his “America First” rhetoric. In a recent post on Truth Social, Trump warned BRICS nations against introducing a common currency, declaring they would face severe economic repercussions, including 100% tariffs on their exports to the US.

“The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is over,” Trump stated. “They can go find another sucker. There is no chance that the BRICS will replace the US dollar in international trade.”

This sharp warning comes after BRICS members met in Kazan, Russia, in October to explore alternatives to the dollar. While many member nations are frustrated by the US’s financial hegemony, a cohesive strategy to implement a common currency remains elusive.

India, an integral member of BRICS, has taken a cautious approach toward the bloc’s proposed currency. External Affairs Minister S. Jaishankar recently emphasized the complexity of establishing a unified BRICS currency, citing the lack of fiscal, monetary, and political alignment among member states.

“From time to time, people have raised that there should be a BRICS currency, but remember, for countries to have a common currency, you need an enormous alignment of the very fundamentals of fiscal policies, monetary policies, economic policies, or even political policies,” Jaishankar explained.

India has valid reasons for hesitating. First, its economic growth trajectory and trade relationships do not necessitate a drastic pivot toward a BRICS currency. The US dollar plays a critical role in India’s trade and financial transactions, and the country has been reluctant to jeopardize lucrative trade agreements with the West by endorsing a currency seen as a direct challenge to the dollar.

Second, India remains wary of China’s influence within BRICS. A common BRICS currency could enable Beijing to further its geopolitical and economic ambitions, potentially at the expense of other member nations. New Delhi is particularly cautious about aligning too closely with policies that could deepen Chinese dominance in the bloc.

India’s trade relationship with the US has grown significantly, encompassing critical sectors such as pharmaceuticals, IT services, and textiles. A 100% tariff on Indian exports, as threatened by Trump, would dramatically increase costs for Indian companies and render their products less competitive in the US market.

Such a move could disproportionately affect small and medium-sized enterprises (SMEs) that rely on exports to the US, creating ripple effects throughout India’s economy. Moreover, higher tariffs could weaken India’s position as a global trade leader and slow down its export-driven growth.

India has also been diversifying its export portfolio to reduce overdependence on any single market. However, the sheer scale of its economic partnership with the US makes it unlikely that India would risk alienating Washington over a BRICS currency initiative.

Trump’s tariff threats signal a broader challenge to the global economic order. For BRICS nations, including India, the pursuit of a common currency reflects their frustration with the US’s dominance in the global financial system. Many emerging economies have long called for alternatives to the dollar, citing its outsized influence on global trade and the risks of being overly exposed to US policies.

However, the implementation of a BRICS currency is fraught with challenges. Economic disparities among BRICS nations, coupled with differing political priorities and governance structures, make a unified currency unlikely in the near term.

Even within BRICS, there is little consensus on how to approach de-dollarisation. While Russia and China have pushed for greater use of their own currencies in bilateral trade, other members, including India, prefer a more measured approach. This divergence highlights the practical difficulties of aligning economic strategies across diverse nations.

India’s cautious stance on the BRICS currency proposal underscores its desire to maintain a balanced foreign policy. While India supports de-dollarisation in principle, it recognizes the risks of alienating the US, its most significant trading partner.

New Delhi’s approach reflects its broader strategy of strategic autonomy. By advocating for greater use of local currencies in bilateral trade, India aims to reduce dependence on the dollar without provoking a direct confrontation with Washington. This pragmatic approach allows India to navigate the complex geopolitical landscape while safeguarding its economic interests.

At the same time, India is aware of the growing anti-dollar sentiment among emerging economies. By participating in discussions on alternatives to the dollar, India can position itself as a leader in shaping the future of global trade without committing to drastic changes that could undermine its stability.

India stands at a critical juncture as it navigates Trump’s tariff threats and the ongoing BRICS currency debate. While the prospect of a common BRICS currency may appeal to nations frustrated with US dominance, India’s economic priorities and strategic interests compel it to adopt a cautious approach.

As the world’s largest democracy and a rapidly growing economy, India is uniquely positioned to influence the future of global trade. However, this influence will depend on its ability to balance competing interests, from deepening ties with the US to supporting initiatives that reduce reliance on the dollar.

In the face of Trump’s protectionist rhetoric, India’s measured response reflects its commitment to preserving economic stability while pursuing its long-term vision of a multipolar world order. Whether BRICS succeeds in challenging the dollar’s dominance remains uncertain, but one thing is clear: India will chart its own path, guided by pragmatism and strategic foresight.

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