Tariffs vs trade : How Trump’s policies could reshape the American economy?

Donald Trump’s recent threat to impose a 100% tariff on imports from BRICS nations – Brazil, Russia, India, China, and South Africa – and their expanding allies has sparked widespread debate. Aimed at defending the US dollar’s dominance in global trade, this policy threatens to raise costs for American consumers and explode global economic tensions.
Trump’s rhetoric reflects concerns about preserving the dollar’s status as the world’s reserve currency, a role it has held since the 1944 Bretton Woods Agreement. Efforts by BRICS nations to reduce reliance on the dollar, including exploring a shared currency, are seen as a direct challenge to American economic hegemony. In a recent post on Truth Social, Trump declared that any move to undermine the dollar would be met with strict tariffs.
“The US dollar remains as dominant as ever,” says Eswar Prasad, a professor at Cornell University, emphasizing its central role in international trade and finance. Yet, critics point out that the dollar’s share in global reserves has declined, from 67% in 2000 to 58% today a shift that cannot be ignored, reflecting a gradual erosion of its unchallenged supremacy.
The economic repercussions of such a tariff policy could be severe. Census Bureau data shows that in 2023, the US imported $578 billion worth of goods from BRICS nations, including vital items such as electronics, pharmaceuticals, apparel, and crude oil. According to Robert Reich, former U.S. Secretary of Labor, tariffs function as a “sales tax” that disproportionately burdens working-class households. The Peterson Institute for International Economics estimates that such a policy could cost the average U.S. household over $2,600 annually.
Goods like smartphones, toys, and computers from China – the largest BRICS trading partner would likely see sharp price hikes. Similarly, items like cotton apparel from India and pharmaceuticals from South Africa could become costlier, adding strain to household budgets already stretched by inflation.
Beyond domestic impacts, the threat of tariffs could escalate global trade tensions. History offers a cautionary tale: during Trump’s first presidency, a trade war with China led to tit-for-tat tariffs, disrupted supply chains, and heightened economic uncertainty.
BRICS nations may retaliate similarly, with Russian President Vladimir Putin already criticizing the U.S. for “weaponizing the dollar.” Meanwhile, China and India are steadily increasing trade settlements in their local currencies, signaling a shift away from dollar reliance.
The broader implications are equally concerning. While BRICS nations have not yet introduced a unified currency, their efforts to diversify away from the dollar underscore dissatisfaction with U.S. financial dominance. Trump’s combative trade policies could also pressure Canada and Mexico into renegotiating the U.S.-Mexico-Canada Agreement (USMCA), further complicating international relations.
Critics warn that such aggressive use of tariffs is a flawed and short-sighted strategy. “You can’t force people to use the dollar,” says Jonathan Kirshner of Boston College. “Coercion will only backfire.” Wendy Cutler of the Asia Society Policy Institute adds that while U.S. allies depend on access to American markets, their growing frustration could lead to unintended consequences.
As the debate over Trump’s trade policies unfolds, the stakes are immense. Could such a protectionist approach secure the dollar’s dominance, or would it accelerate the diversification of global trade practices? One thing is certain: American households may bear the brunt of this economic gamble, and the ripple effects could reshape the global economy for years to come.