The US President-Elect shows his hand, by trading the threat of future punitive tariffs with ironclad commitments to uphold the American currency as the world’s reserve currency. 

Although he is not yet in office, once and future President Donald Trump is already making waves and unusual pronouncements about economic and market intent.

Over the weekend, in a post on his Truth Social network, he issued a relatively matter-of-fact quid pro quo, at least by his standards, linking potential tariffs with the dollar’s role as an international reserve currency.

Not Standing By

He said that BRIC nations, including China, would have to commit to not shifting economic activity toward a new currency as a dollar alternative with the threat of 100 percent tariffs.

«The idea that the BRICS Countries are trying to move away from the dollar while we stand by and watch is OVER,» Trump indicated.

Goodbye to Selling

«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, and should expect to say goodbye to selling into the wonderful U.S. Economy,» Trump stated.

This, however, goes directly against China’s intent to increase the share of currency reserves held in renminbi worldwide and its clear intent to use it for trade, particularly related to oil from the Middle East and with Russia.

Still High

This was something finews.asia commented on at length in May on the back of a speech by Federal Reserve governor Christopher Waller.

In it, he indicated that sanctions and geopolitical distance between the US and China seemed to lower the dollar’s share in foreign exchange reserves even if it remained relatively robust by historical standards.

Interesting Trade

If nothing else, the statement on Truth Social certainly shows an interesting bargaining position, as well as hinting att latent nervousness about the economic and market trajectories of BRICS countries, but we will have to wait and see what actually happens when Trump takes power at the end of January.

What is certain - intense discussions about the dollar's role in international markets are practically guaranteed with clients from all walks of life.