A US-imposed 100 percent tariff on BRICS countries would cause lower GDP, higher inflation than otherwise for all

By Warwick J. McKibbin – PIIE.com

President Donald J. Trump has threatened to impose 100 percent tariffs on countries that seek to reduce the US dollar’s dominant role in global finance. But, if he does, the tariffs could result in lower GDP and higher inflation than otherwise in the US and most of the targeted countries—which could include the BRICS countries (original members Brazil, Russia, India, China, and South Africa plus newcomers including Egypt, Ethiopia, and Iran). 

China, the dominant member of the BRICS, is looking to reduce its reliance on the dollar by encouraging greater use of the renminbi (RMB) through promoting RMB exchanges. Russia might seek to further decouple from the dollar as well because of Western financial sanctions. Even so, the BRICS don’t pose a serious threat to the dollar’s dominance.