Amid trade tensions, US President Trump proposed a 10 per cent tariff on BRICS nations trading in non-dollar currencies. GTRI says the move overlooks the fact that US-led sanctions forced countries like India and China to adopt local currency trade. With SWIFT access blocked for some, nations turned to survival mechanism.
Picture from the 17th BRICS Summit. Pic/PTI
Amid the ongoing global unrest and chaotic trade deal situations, US President Donald Trump has proposed a 10 percent tariff on all BRICS nations for conducting trade in non-dollar currencies. The move was made by the US president, overlooking Washington's own economic and geopolitical actions, economic think tank GTRI said on Friday.
India, Brazil, Russia, China, South Africa, Saudi Arabia, Egypt, the United Arab Emirates, Ethiopia, Indonesia, and Iran are the BRICS members. After this announcement from the US President, the global trade spectrum seems to be alarming.
The Global Trade Research Initiative (GTRI) said the US sanctions and SWIFT bans on countries like Russia, Iran, and Venezuela have blocked dollar-based payments, forcing nations like India and China to trade in local currencies with Russia, as per news agency PTI.
SWIFT is a global messaging system that routes payment instructions between banks worldwide. Addressing Trump's announcement, GTRI Founder Ajay Srivastava said, "The shift from the dollar wasn’t a revolt; it was the only route left. Over 90 per cent of Russia–China trade is now settled in roubles or yuan; India pays for Russian oil in rupees and dirhams; even Saudi Arabia is open to non-dollar oil trade — cracking the 1970s petrodollar pact."
"Trump ignores the fact that it is the US actions that forced countries to search for dollar alternatives in the first place," he further added.
He added that Trump's 10 per cent tariff plan on BRICS and 500 per cent penalty on countries buying Russian oil makes it difficult for countries to negotiate trade deals with the US.
He further added that "in essence these deals are MASALA deals — Mutually Agreed Settlements Achieved through Leveraged Arm... India must stay cautious,” as reported by news agency PTI.
GTRI founder Srivastava further asserted that SWIFT connects over 11,000 banks in over 200 countries and was designed to be a neutral platform for trade-related payments.
But under US pressure, he said, SWIFT has blocked access to countries under American sanctions, like Iran, Venezuela, and Russia, ultimately worsening their global trade situation.
"As a result, countries importing oil and gas from sanctioned suppliers had no option but to bypass the dollar. India pays for Russian crude in rupees and UAE dirhams through non-SWIFT channels. China uses yuan to settle Russian gas trade. This isn’t an anti-dollar strategy — it’s a survival mechanism triggered by US sanctions," GTRI said.
To help countries facing dollar shortages, in 2022, the RBI allowed trade settlements in Indian rupees. Soon after this, Russian banks also opened rupee accounts in India for oil payments.
On the issue of trading in local currencies, he said, “It is a country’s sovereign right, as with proper planning, local currency trade can cut transaction costs by up to 4 per cent by avoiding double-dollar conversions at both the buyer and seller ends,” as cited by news agency PTI.
(With PTI Inputs)
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