Trump's 100% tariff threat is ridiculous; India should concentrate on trading in its own currency: GTRI

Trump's 100% tariff threat is ridiculous; India should concentrate on trading in its own currency: GTRI

New Delhi, Dec 1 (PTI) US President-elect Donald Trump's threat to levy 100% customs taxes on BRICS nations should they replace the US dollar is unrealistic, according to think tank GTRI, which stated on Sunday that India should concentrate on creating a functional local currency trading system.

The only significant international organization that the US is not a member of is BRICS, which was established in 2009. Ethiopia, Egypt, Iran, South Africa, and the United Arab Emirates are among its other members. Some of its members, especially China and Russia, have been looking for a substitute for the US dollar or developing their own BRICS currency in recent years. India has not yet joined the movement.

Trump cautioned the BRICS countries against doing so on Saturday.

Tariffs of this magnitude, according to the Global Trade Research Initiative (GTRI), would only hurt US consumers since they would raise import costs, impede international trade, and expose the country to retaliation from important trading partners.

"Trump's pledge to levy 100% tariffs on nations who use the BRICS currency is impractical and more symbolic than useful. The wise course of action for India is to concentrate on creating a transparent and open currency exchange in order to make local currency trading feasible, according to GTRI Founder Ajay Srivastava.

Neither the dominance of the US dollar nor the complete adoption of a BRICS currency at this time, he argued, are in India's best interests.

He added that threatening sovereign nations erodes diplomatic ties and ignores the multipolar nature of the modern world. "By improving its own financial infrastructure, India can better navigate the shifting dynamics of global trade," he said.

According to Srivastava, no nation—including the US—can unilaterally set global economic policies without suffering consequences.

"Countries have the right to make decisions in their best interest, especially when existing systems have been used against them," he stated.

Although the US dollar accounts for more than 90% of transactions worldwide, it is not the only currency that is used abroad.

The US has not objected to the use of other convertible currencies, such as the British pound, the euro, and the Japanese yen, which are also essential to international trade, according to the GTRI.

These current options are merely expanded upon by the proposed BRICS currency, which seeks to

avoid an excessive dependence on a single currency and promote trade among member nations, it continued.

"Many nations are looking for alternatives to the US dollar as a result of the US's actions. The US has a history of enforcing unilateral sanctions by using its sway over international banking networks, including the SWIFT network," the statement continued.

Additionally, it stated that a 100 percent tariff on the BRICS nations might have unintended economic consequences and that, while they would disrupt certain facets of global commerce, they would ultimately harm the United States the most.

"Imports into the US would simply shift to third countries, potentially increasing costs for American consumers without bringing manufacturing jobs back home," it stated.

It further stated that increasing production costs have made the US less competitive in producing labor-intensive items, and tariffs are unlikely to change this.