Trump Threatens 100% Tariff on Countries That Ditch the U.S. Dollar

Donald Trump has waned any government looking to move away from using the U.S. dollar that they will face significant financial disadvantages, including a 100% tariff on importing goods to the U.S. market.

At a Glance

• Donald Trump pledged to impose a 100% tariff on goods from countries that move away from using the U.S. dollar.
• This statement was made at a rally in Wisconsin, a key battleground state.
• Trump and his economic advisers have discussed penalizing countries that trade in currencies other than the dollar.
• Options considered include export controls, currency manipulation charges, and tariffs.
• Trump claims the dollar has been “under major siege” for eight years.

Trump’s Tariff Threat at Wisconsin Rally

In a speech at a rally in Wisconsin, former President Donald Trump vowed to implement a 100% tariff on goods from any country moving away from the U.S. dollar.

“You leave the dollar and you’re not doing business with the United States because we are going to put a 100% tariff on your goods,” Trump stated, reinforcing a long-standing protectionist stance in the wake of rise of a Russia and China-led economic union known as “BRICS.”

The rally took place in Wisconsin, a critical battleground state that could significantly influence the election outcome. Trump’s campaign swing also included stops in Pennsylvania, North Carolina, and New York City.

The comment went down well with his supporters, but as usual, Trump faces extreme criticism for his ideas. Some commentators argue that Trump doesn’t understand the implications of taxing foreign goods, arguing that the policy would constitute a tax on U.S. buyers.

Hao Hong from the GROW Investment Group expressed skepticism about Trump’s proposals, describing the potential tariffs as a “lose-lose” scenario, cautioning that such measures might provoke retaliatory actions from other nations, especially China. Analyst Ulrich Leuchtmann from Commerzbank AG also raised similar concerns, suggesting that Trump’s tariffs could incentivize a global shift away from the dollar, thereby undermining its safe-haven status and weakening its value.

Despite these warnings, Trump has consistently maintained that the dollar’s dominance is crucial for the U.S. economy. His team has discussed various punitive measures, including export controls and charges of currency manipulation, aimed at nations that may abandon the dollar standard. Team Trump believes that the incentives for sticking with the U.S. dollar will prevent the tariffs from needing to be implemented in the first place.

Several countries, including China, India, Brazil, Russia, and South Africa (BRICS), have recently discussed efforts to reduce their dependency on the U.S. dollar as the world’s reserve currency. These discussions, part of a broader de-dollarization trend, include developing digital currencies and alternative financial infrastructures. Such moves have prompted Trump to assert the necessity of stern economic measures to maintain U.S. supremacy in global markets.

Economists note that while the dollar’s share in official foreign-exchange reserves has declined, it still accounted for 59% of the market in Q1 2024. Analysts from JPMorgan estimate that significant erosion of the dollar’s dominant position will occur slowly over decades.