The United States’ economic and geopolitical strategies are prompting countries to explore alternatives to the dollar for international trade. President Donald Trump has suggested a 10 percent tariff on BRICS nations trading in non-dollar currencies, a move seen as a response to the very measures initiated by Washington. The BRICS group, including nations like India, Brazil, Russia, China, and South Africa, has been exploring local currency trade due to US sanctions and SWIFT bans affecting countries such as Russia, Iran, and Venezuela. These sanctions have complicated dollar-based transactions, pushing countries like India and China to settle trades in their local currencies with Russia. Over 90 percent of trade between Russia and China now occurs in rubles or yuan, and India uses rupees and dirhams for Russian oil purchases. Saudi Arabia has also shown openness to non-dollar oil trade, challenging the longstanding petrodollar system. Trump’s proposed tariffs and penalties on countries purchasing Russian oil complicate trade negotiations with the US, leading to what some describe as MASALA deals—Mutually Agreed Settlements Achieved through Leveraged Arm. The SWIFT network, originally designed as a neutral platform, has restricted access to countries under US sanctions, forcing them to find alternative payment methods. In 2022, India’s central bank permitted trade settlements in rupees, aiding nations facing dollar shortages. Despite China’s push for a BRICS common currency, India has declined the proposal, emphasizing the benefits of local currency trade in reducing transaction costs.
Are US actions driving countries to seek alternatives to the dollar for trade?
