Trump vs. BRICS: Battle over global currency dominance
President-elect Donald Trump said he would require countries that are part of BRICS to commit to not creating a new currency or face 100% tariffs during his administration. The warning came less than a week after Trump declared he would impose tariffs on Canada, Mexico, and China once he was inaugurated as president.
This summit promises to be a significant event not only for its member states but also for countries seeking closer ties with BRICS. Among these countries is Azerbaijan, which aims to contribute to the development of a multipolar world and foster deeper global cooperation.
The spokesman for Azerbaijan’s Foreign Ministry, Aykhan Hajizada, announced on August 20 that Azerbaijan has officially applied to join the BRICS group. This move follows the July 3 adoption of the "Joint Declaration of the Republic of Azerbaijan and the People’s Republic of China on Establishing a Strategic Partnership" during the Shanghai Cooperation Organisation summit in Astana. As stated in paragraph 4.5 of the declaration, Azerbaijan expresses its desire to join BRICS, and China welcomes Azerbaijan’s participation in BRICS cooperation.
Baku's aspiration to join BRICS is no surprise. BRICS includes Azerbaijan's key trading partners and major investors. Specifically, China and India remain the country's largest economic partners, contributing significantly to trade volumes and investments in key sectors. Azerbaijan actively fosters bilateral relations with leading countries worldwide, employing a strategic foreign policy based on the principles of sovereignty and non-interference. Joining BRICS would enhance this course, enabling the country to expand political and economic cooperation with major global players.
A 100% tariff at the U.S. border, if implemented, would sharply increase the cost of goods from BRICS members, fueling U.S. inflation and destabilizing global trade flows.
News.Az has learned the opinion of Azerbaijani economist and Milli Majlis deputy, Vugar Bayramov regarding the potential negative impact of Trump’s decision on Azerbaijan’s economic relations with the U.S.
Mr Bayramov emphasized that the issue of creating a new currency against the US dollar has been discussed for a long time: “Although BRICS is not an institutionally formed organization, it is one of the leading power centers in the world. Because currently, the GDP of the BRICS countries is higher than that of the G7. Especially considering that recently there has been an increase in the GDP of the BRICS as a whole, and 30 percent of the global GDP, and even, according to some estimates, about 35 percent, falls on one country. In this context, considering that 45 percent of the world's population lives in the BRICS countries. In this regard, due to its economic power, BRICS has greater power than the G7 as a whole. Therefore, BRICS can't create a single currency and abandon the dollar in trade transactions in mutual transactions.”
“I do not believe that joining BRICS as an observer can seriously harm our relations with the United States. Several leading countries in BRICS are global competitors to the United States in economic terms. In particular, China, as well as the growing Brazil and India. Of course, the US messages here are more aimed at China. Because the newly elected President of the United States is practically sending a message to those countries that if a single currency is created, there will be difficulties in entering the US market. There will be high tariffs, quotas will be determined, and the US market is very important for those countries. Because a significant part of the exports of those countries falls to the United States. In this regard, it is a message addressed to countries that have a share in the US market, and especially to the three countries in question, and more, of course, to China. Therefore, Azerbaijan's membership in BRICS as an observer will not harm our relations with the United States. The creation of the BRICS currency will depend on which countries join this currency. Because the creation of the BRICS currency is a long-term process, I do not see the creation of a single currency in the short term as realistic. But if such a currency is created, which countries join it and participate in the creation of this currency are one of the main issues. Azerbaijan has a national currency. Since more than 80 percent of Azerbaijan's exports are strategic products, these products are sold in US dollars. In this context, even if a single BRICS currency is created, trade transactions with economically leading countries for Azerbaijan will still be carried out in US dollars. Because since Azerbaijan sells strategic products, these products are also sold in dollars, the United States dollar will remain the main currency in Azerbaijan's foreign trade in the coming periods,” Mr. Bayramov.
Baku-based economist Eldeniz Amirov told News.Az that the statement as a hasty and inaccurate decision: “Trump's statement is a hasty decision. I would call it an inaccurate and meaningless statement in the true sense of the word. This is because the BRICS countries do not have such an opportunity. Due to the financial constraints of the BRICS countries, the weak economic relations between these countries, the weak trade turnover with countries outside the BRICS group, and other reasons, it is impossible to introduce a common currency. Even Russian President Vladimir Putin acknowledged this in one of his recent speeches.”
Economist noted that there are currently no plans to create a single currency for BRICS: “There are only occasional proposals regarding it. To issue this currency, a Central Bank, that is, a unified bank for this institution, needs to be established. A bank has already been created in certain aspects. However, its use and the overall details in this regard are not satisfactory. In other words, practically, this is not feasible.”
Economist, commenting on Trump's statements regarding Azerbaijan-US economic relations, noted that these cannot have any significant impact on Azerbaijan's economic ties with the US: "Azerbaijan's exports to the US are not large enough to talk about any substantial benefits for Azerbaijan. And, as I mentioned earlier, discussing a single currency for BRICS at this point is an idea that does not reflect any reality."
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