Trump: 100% tariff on all goods from countries shifting away from US Dollar
Good luck with that.
Throughout history, economic warfare has often involved currency and trade policies as weapons. In ancient Rome, Emperor Diocletian attempted to combat inflation by issuing the Edict on Maximum Prices in 301 CE, fixing prices for goods and services. This was countered by merchants who simply stopped trading or operated in black markets.
Fast forward to the present, and we see a similar dynamic playing out on a global scale. The BRICS nations (Brazil, Russia, India, China, and South Africa) have been working on developing a new currency called UNIT or mBridge, which is reportedly 60% backed by gold. This move is seen as a direct challenge to the dominance of the US dollar in international trade.
In response to this potential threat to dollar hegemony, former President Trump has proposed a drastic countermeasure - imposing 100% tariffs on countries that abandon the US dollar for international transactions. This policy aims to make it financially prohibitive for nations to shift away from using the dollar, echoing historical patterns of economic retaliation and currency wars
Former President Donald Trump has announced a controversial plan to impose a 100% tariff on countries that move away from using the US dollar in international trade.
This proposal aims to maintain the dollar's status as the world's primary reserve currency and deter nations from seeking alternatives.
Key Points of Trump's Proposal
Trump pledged to impose a 100% tariff on goods from countries that abandon the US dollar for international trade.
The policy is intended to make it financially prohibitive for nations to shift away from using the dollar.
This announcement was made during a rally in Wisconsin, a key battleground state in the upcoming presidential election.
Context and Motivations
Trump's proposal comes amid growing discussions of de-dollarization globally:
Countries like China, India, Brazil, Russia, and South Africa have explored alternatives to the dollar such as the UNIT (backed 40% Gold)
There's been a push for trade settlements in national currencies, such as India's efforts to use the rupee in international transactions.
The US dollar's share of global foreign exchange reserves has declined but still accounts for 59% according to the IMF.
Potential Implications
Economic experts have raised concerns about the potential consequences of this policy:
It could lead to a "lose-lose" situation for both the US and its trading partners, particularly China.
Janet Yellen and Antony Blinken recently made separate visits to China as part of ongoing high-level diplomacy between the U.S. and China. During her visit, Treasury Secretary Yellen raised concerns about China's industrial overcapacity and its impact on global markets. She specifically discussed "unfair trade practices" and emphasized the "global economic consequences of Chinese industrial overcapacity".
While Secretary of State Blinken's visit focused more on broader diplomatic issues, economic concerns were also on the agenda. Both officials aimed to address the issue of cheap Chinese goods flooding international markets, which the U.S. views as a result of unfair subsidies and policies that give Chinese manufacturers an advantage over global competitors
Implementing such high tariffs would significantly increase US inflation.
For countries like China, it could negatively impact exports at a time when growth is already slowing.
As the back and forth between BRICS and US dollar builds Gold becomes increasingly valuable.
Global Currency Dynamics
The US dollar remains dominant in global markets, but its market share (power) is quickly diminishing.
BRICS ++ meet October 24 in Russia where more UNIT / mBridge architecture will be revealed.
Trump's proposed policy reflects his commitment to protectionist trade policies and his desire to defend the dollar's global status. However, it has sparked debate among economists and policymakers about its potential effectiveness and economic consequences.
The UNIT is designed as a fractal monetary ecosystem to challenge the dominance of the US dollar in international trade and reserves. It introduces an "apolitical money" system that is:
Backed by 40% gold and other freely convertible currencies
Decentralized, with nodes in various jurisdictions
Resistant to political interference
Able to function without constant coordination among participants
The UNIT allows countries to maintain sovereign monetary policies while participating in global trade. It eliminates the need for using other nations' currencies as reserves. The system aims to provide a stable, transparent alternative to the dollar, potentially reducing US economic influence and offering countries more financial independence