Amid growing tension between the BRICS economic alliance and the US, Donald Trump’s impending tariff threat has China considering what would be a major move to ditch the US dollar. Shortly after his victory, the United States President-elect warned he would impose 100% tariffs on countries looking to abandon the greenback.
The move is looked at as a key defense from Trump to protect the global status of the currency. However, the BRICS alliance has not been shy about its goal to diversify global finance. Specifically, it has been seeking to promote local currencies over the dollar for much of the last two years.
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China Presents Answer to Trump Tariff Threat; It’s Bad News for the US Dollar
Since 2022, the BRICS bloc has firmly embraced de-dollarization efforts. After Western sanctions were imposed on Russia following its invasion of Ukraine, the alliance sought new ways to lessen its reliance on the currency. Since then, talks of trade settlement assets and payment systems have abounded.
Yet the United States, with a new regime impending, has sought to put an end to that. But that hasn’t stopped the bloc from defending itself. Indeed, amid the BRICS and US face-off, Donald Trump’s 100% tariff threat has been answered, with China eyeing a key move to ditch the US dollar.
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A new report has called for China to anchor the yuan to non-US dollar currencies. Specifically, a Beijing-based think tank urged policymakers to explore a basket of currencies for the exchange rate of the yuan. The move would create more flexibility in terms of domestic monetary policy and would seek a boost in demand.
The China Finance 40 Forum group that proposed the idea is comprised of senior Chinese regulator officials and finance experts. Moreover, it was devised as a clear answer to the ongoing worry Donald Trump presents.
“Given the stronger dollar and tariff threats posed by Donald Trump’s re-election, intensified external uncertainties could limit the space for domestic monetary policies aimed at maintaining internal and external balance,” the group said. Therefore, finding a new anchor for the currency would “counter the pressures.”
