President-elect Donald Trump has issued a warning to BRICS member states, including South Africa, threatening punitive tariffs on imports if they continue efforts to diminish the U.S. dollar’s dominance as the world’s reserve currency.
Trump’s latest rhetoric has sparked fears of significant economic consequences, particularly for South Africa, which exports billions of rands worth of goods to the U.S. annually.
Trump, known for his fiery social media posts, declared over the weekend, “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 U.S. dollar, or they will face 100% tariffs.”
He added, “They can go find another ‘sucker!’ There is no chance that the BRICS will replace the U.S. dollar in international trade.”
The threats come as the BRICS+ bloc has recently intensified discussions about expanding intra-trade using domestic currencies. While creating a common BRICS currency remains uncertain, the idea has fueled Trump’s protectionist ire.
South Africa, which exports approximately R180 billion annually to the U.S., primarily in mineral resources, could face severe repercussions if Trump follows through on his threats.
Donald MacKay, CEO of Global Trade Advisors, expressed skepticism about the viability of a BRICS currency but noted that even the mere discussion of it has provoked an aggressive U.S. response.
“I think it would be well-nigh impossible to set up a BRICS currency. But I don’t think Trump is having a technical conversation. He’s responding in an aggressive way because he doesn’t like the conversation about any other currency topping the U.S. dollar as the world’s reserve currency.” Donald MacKay
MacKay also questioned the feasibility of imposing such drastic tariffs, as they would require congressional approval. “If I had to bet — though I probably shouldn’t, given that Trump is not the most rational person — I would say it is unlikely we see a 100% tariff on BRICS members,” he added.
Nonetheless, if tariffs were implemented, the consequences could be devastating. MacKay estimated that duties on mineral exports alone could jeopardize R90 billion in trade.
Furthermore, losing benefits under the African Growth and Opportunity Act (AGOA) — which currently saves South African exporters around R2 billion annually in duties — would compound the economic strain.
Tariffs Add to Trump’s Global Protectionist Agenda
Trump’s tariff threats extend beyond BRICS nations. In recent weeks, he has proposed 25% tariffs on Mexican and Canadian goods and an additional 10% on Chinese imports. Economists warn that such measures reflect a broader protectionist trend that could harm global trade.
Nolan Wapenaar, co-chief investment officer at Anchor Capital, suggested Trump’s recent rhetoric represents a renewed focus on tariffs. “This erratic policy will do more to damage confidence in the dollar than anything else,” Wapenaar noted.
South Africa, while not the primary target, remains in the crosshairs of Trump’s aggressive trade stance. “In the short term, the crosshairs are probably more on China than South Africa. Still, it’s not helpful,” Wapenaar added.
Amid these threats, South Africa’s economy has shown signs of resilience. The country’s trade surplus widened to R14.6 billion in October, the largest in three months. Exports surged by 5.3% to nearly R179.6 billion, driven by strong performances in precious metals, chemicals, and machinery.
However, Investec economist Lara Hodes cautioned that underlying challenges persist. “While there has been an improvement on the logistics front domestically, inefficiencies and deficient infrastructure continue to weigh on export potential,” Hodes said.
Global factors also play a role. “The global manufacturing environment in a number of advanced countries remains lackluster,” Hodes added, highlighting the broader headwinds facing South African exporters.
As such, as Trump’s threats loom, South African officials and businesses face growing uncertainty. While the prospect of 100% tariffs may seem unlikely, the unpredictability of Trump’s approach leaves little room for complacency.
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