Trump's 100% Tariffs Warning to BRICS Rattles Asian Currencies

Concerns around Donald Trump’s pledges of tariffs hurt Asian currencies once again on Monday, after the US president-elect warned on the weekend that he would impose 100% levies on BRICS countries if they seek to replace the dollar.

The BRICS countries include China, India and Russia, and Moscow has been looking to convince the bloc to build an alternative currency against a “weaponised” dollar, as key companies have been hit by US or Western sanctions because of the war in Ukraine.

Last month, the bloc met in Kazan city in Russia, where a BRICS currency was a key item of debate, with Moscow proposing a new payments system based on a network of commercial banks linked to each other through member countries’ central banks.

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On Saturday, Trump took to his social media platform, Truth Social, criticising the push.

“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,” Trump wrote.

“They can go find another ‘sucker’. There is no chance that the BRICS will replace the US Dollar in International Trade, and any Country that tries should wave goodbye to America.”

Trump’s tweets dealt a fresh blow to Asian currencies that have been in rough seas already over the last month amid concerns about his previous tariff threats.

China’s yuan fell to a four-month low as Trump’s threats coupled with mixed purchasing managers’ index (PMI) data raised concern the world’s second-biggest economy might need additional policy support.

The onshore yuan dropped to a low of 7.2675 per dollar.

Meanwhile, the Indian rupee declined to its weakest level on record of 84.7050 against the dollar. Concerns about India’s economic growth slowing to its lowest in seven quarters weighed on the currency, along with a rally in the dollar thanks to Trump’s comments.

Any tariff threat to boost dollar

The worst hit was the Thai baht, which lost as much as 0.7% of its value – its worst day since mid-November. Malaysia’s ringgit and Singapore’s dollar also lost around half a percent.

An MSCI gauge of emerging market currencies lost as much 0.4% during Asian trading hours to hit its lowest intraday level since November 14.

The US dollar, meanwhile, was up more than 0.4% at around 106.22 against a basket of major currencies.

Yeap Jun Rong, a market strategist at trading platform IG, said while Trump’s floated 100% tariff was likely just a warning for now, any mention of tariffs may prompt an immediate upside reaction in the US dollar.

Meanwhile, analysts at Maybank wrote in a note that “there is an ongoing push to reduce reliance on the USD and it remains to be seen if Trump can do anything to stop or delay this.”

Responding to Trump’s threat, Kremlin spokesman Dmitry Peskov said on Monday that any attempt by the US to compel countries to use the dollar would backfire.

Peskov said the dollar was losing its appeal as a reserve currency for many countries, and the trend was gathering pace.

Chinese state-backed newspaper Global Times also posted similar comments on social media platform X.

By “using tariffs to threaten the world, the US will inevitably trigger domestic inflation, which in turn will undermine consumer and investor confidence,” it said.

“Have US economists already calculated this cost?”

Reuters, with additional editing and inputs by Vishakha Saxena

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]