Faced with threats from Donald Trump to impose tariffs on countries that try to abandon the dollar for international trade, the deputy speaker of the Russian State Duma, Alexander Babakov, said that such an application was “unlikely”.  

Trump issued the warning earlier this month, directing his words primarily at countries in the BRICS, the regional bloc led by Russia and China that has been pushing the de-dollarization plan. 

In an opinion piece published in Russian outlet Iz, Babakov said that while the threat of tariffs by the United States is theoretically possible , their implementation is “unlikely.”  

The official believes this is due to the high interdependence between the economies of the United States and several of the BRICS countries. He cites as possible obstacles the alternative payment systems that the regional bloc is developing, and the expected domestic opposition in the United States. 

“It is obvious that sanctions of this level against China, India, and Brazil will inevitably damage the US economy in strategic sectors such as electronics, raw materials and agricultural products,” he added. 

Babakov believes that if Trump applies up to 100% tariffs on countries that support de-dollarization - as he warned:  the BRICS may respond with similar restrictions.  

Such a development would lead not only to a tariff war between the US and countries that support de-dollarization, but would also lead to higher prices for consumer goods within the United States.  

“Inflation and political pressure on the Trump administration would accelerate. And the new US president needs only victories at the beginning of his term,” Babakov said. 

With his threat, Trump is seeking to halt the BRICS' plans to create a single currency for international trade, which was announced at the beginning of this year. This new currency was expected to be presented at the summit held last October and which, according to Babakov, is not necessary. 

According to the Deputy Chairman of the State Duma, there is no need for a new currency, especially if we take into account the progress that has been made in the use of other systems that are already leading the BRICS towards de-dollarization . He cites among them the use of local currencies, central bank digital currencies and cryptoassets. 

The BRICS are already creating a multilateral digital platform, BRICS Bridge, which is based on the participating countries’ system of central bank digital currencies (CBDC). It will significantly simplify and speed up international payments, reduce transaction costs, eliminate intermediaries and attract developing economies. 

Alexander Babakov, Deputy Chairman of the State Duma. 

At this point, the official recalls the progress of CBDC projects such as the digital ruble, the digital yuan and Brazil's DREX.  

In addition to BRICS Bridge, the new payment system includes tools such as BRICS Pay, the Financial Messaging System for Transfers (SPFS), and a stablecoin: the Common Account Unit (Unir), which would be backed by gold.   

There is no need for a single BRICS currency

With all these tools, the BRICS believe that a single currency would not be necessary, a project that for the moment is “not viable “, as declared by the Kremlin spokesman, Dmitri Peskov, just one day after Donald Trump's victory in the United States was announced. 

These statements, together with those made by Russian President Vladimir Putin, stating that they had “no intention of abandoning the dollar”, have led people to think that the de-dollarisation plans have been halted. Above all, due to the expectations generated after the arrival of the new president in the USA.  

Putin said the aim of the platform is to “increase investment flows to the BRICS countries.” Source: TASS.

Doubts also arose after India said it was not aiming to abandon the dollar. India's foreign minister, Subrahmanyam Jaishankar, said the country was not interested in de-dollarization , and would therefore continue to use the US dollar “wherever it is accepted as a form of payment.” 

Despite this information, the Deputy Chairman of the State Duma denies that the process has been halted, stating that de-dollarization remains the goal of the BRICS and downplaying Trump's warnings.  

“The financial revolution in payment systems is happening right now, and it cannot be stopped. The fact is that for this, the BRICS countries do not even need to create a single currency: they just need to launch a series of fully-fledged payment instruments.”

The dollar will continue to be a tool of political pressure

Alexander Babakov also took the opportunity to question the use of the dollar in the global geopolitical strategy. A situation that he does not expect to change with Donald Trump. 

“We see how the dollar has become an instrument of political pressure. If the approaches to the world's financial architecture are revised, the use of a payment system or currency for political purposes will be completely eliminated,” the Russian official insists. That is why he sees Trump's threats as part of “a strategy of the American political elites that does not change.”