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Trump advisers are mulling penalties for any countries that stop using the dollar, report says

Filip De Mott   

Trump advisers are mulling penalties for any countries that stop using the dollar, report says
  • Donald Trump's advisors are discussing penalties for countries that move away from the dollar, sources told Bloomberg.
  • The former president previously said he "hates" when countries abandon the currency.

Economic advisors to Donald Trump are working out plans to blunt de-dollarization efforts, which could include penalties on any economy that moves away from the greenback.

Tariffs, export controls, and currency manipulation charges are among some ideas discussed by advisors to the former president, sources told Bloomberg. These measures would target countries that take part in bilateral trades not based in dollars, and could also include US allies.

Fears of a de-dollarization backlash first emerged after the West slashed Russian access to the greenback in 2022 in retribution for Moscow's invasion of Ukraine. For the many countries exposed to the dollar, that prompted calls to become less dependent on the US currency as a mainstay of international trade and central bank reserves.

Anti-dollar rhetoric especially took shape among BRICS nations, an economic bloc of rising economies that include major US competitors, such as China and Russia. Early last year, the group announced plans to eventually develop its own currency, and has since extended membership to key states, such as Saudi Arabia and the United Arab Emirates.

If Trump were to win a second presidential term in November, his administration may put special focus on countering any BRICS effort, Bloomberg reported.

Worries about dollar overdependence even came from Europe, with French President Emmanuel Macron voicing concerns in 2023. Aside from just words, experiments in non-dollar trades picked up that year, with the Chinese yuan taking center stage.

"I would not allow countries to go off the dollar because when we lose that standard, that will be like losing a revolutionary war," Trump told CNBC in March, noting that he "hates" when countries abandon the currency.

But so far, de-dollarization sentiment hasn't made much headway or resulted in any sizable shift in the greenback's global use. As of March, the dollar still leads in global payments, making up 47.4% of transactions, SWIFT data shows.

Despite Trump's desire to keep the dollar at the top, at least one analyst has previously warned that his proposed trade policy could risk accelerating de-dollarization. According to Nouriel Roubini, Trump's plans to apply a universal tariff on all US imports has the potential to spark trade wars, and encourage economies to ditch the greenback.

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