India China Vs US Dollar; Donald Trump BRICS Tariff Threat Reason Explained | Today's Explainer: Trump threatened India-China, why is America so afraid of the threat to the dollar; Everything you need to know

Question-2: What did the BRICS countries do that made Trump angry? Answer: This year, the 16th summit of BRICS countries was held in Kazan city of Russia from 22 to 24 October. During this time, there was a discussion among BRICS countries about creating their own payment system, so that the dollar can be used less for global trade.

The idea was to create this payment system on the lines of the global SWIFT payment system. India had also offered its UPI for payment system to BRICS countries.

During this period, discussions about creating a new currency for the trade of BRICS countries or using the currency of another country also intensified. However, no consensus could be reached among the BRICS countries for this.

Before the BRICS summit, Russian President Putin had said that Russia does not want to give up or defeat the dollar, but it is being prevented from working with the dollar. Therefore, there is a compulsion to find some other alternative in place of the dollar.

PM Modi, President Putin and President Xi Jinping attend BRICS summit on 23 October

Trump is enraged by these efforts of BRICS countries to reduce the value of the dollar. BRICS includes 9 countries including India, Russia and China. It is a group of countries with emerging economies.

Question-3: How did the US dollar become the strongest currency in the world? answer: Suppose India does not trust Pakistan's currency. In such a situation, he will not trade in Pakistani currency. To solve such a problem, in 1944, many countries together made the dollar the base currency. That means India can do business with Pakistan in dollars, because it knows that the American dollar will not sink and if needed, America will give gold in exchange of dollars.

This system lasted for about 3 decades. The dollar had become the world's safest currency, but in the early 1970s many countries started demanding gold in exchange for the dollar. These countries used to give dollars to America and take gold in return. Due to this, America's gold reserves started depleting.

In 1971, US President Nixon separated the dollar from gold. Despite this, countries continued to transact in dollars, because by then the dollar had become the safest currency in the world.

There was another big reason for the strength of the dollar. In fact, in 1945, US President Roosevelt signed an agreement with Saudi. The condition of the agreement was that America would protect it and in return Saudi would sell oil only in dollars. That means if countries want to buy oil, they must have dollars.

Question-4: How does America earn billions sitting on the power of dollar? answer: We pay the price to buy something in many ways. Like- cash, online banking, UPI transfer. Similarly, countries around the world use America's SWIFT network to do business among themselves. Through this, America earns billions while sitting there.

The SWIFT network started in 1973 with 518 banks in 22 countries. At present, it includes 11,000 banks from more than 200 countries, which keep their foreign exchange reserves in American banks. Now not all the money is invested in business, so countries invest their extra money in American bonds, so that they can get some interest. Including all the countries, this money is about 7.8 trillion dollars. That means twice more than India's economy. America uses this money for its growth.

Question-5: Is de-dollarization possible, if yes then to what extent? answer: American economist Simon Hunt believes that the BRICS currency or system will compete with the US dollar in the next 2 years. Experts believe that BRICS countries will not agree on any one currency. However, they may create a payment system or agree to trade in their own currencies.

Pro. According to Rajan Kumar, it is not possible to do complete de-dollarization at present. He says,

Even if national currency is traded in BRICS countries, its value is based on the dollar only. That is, when there is trade between Russia and China, the value of ruble and yuan is decided on the basis of dollar. Even if BRICS countries create a payment system; So this will lead to a reduction in the use of dollars, rather than complete de-dollarization.

Question-6: Will America be destroyed by de-dollarization? answer: America maintains its dominance in the world on the basis of strong dollar and economy. Whenever any country challenges it in any way, America imposes sanctions on that country. By doing this, America affects the countries' trade and their foreign policy.

De-dollarization could change the balance of power between countries. Also, it will shape the global economy and market in a new way. America will be affected by this.

Donald Trump considers de-dollarization a big threat to America. He had said in an election rally that 100% tariff would be imposed on the countries which leave the dollar.

Rajan Kumar explains, 'The trade in dollars across the world is many times more than the trade in BRICS countries. In such a situation, even if BRICS brings any currency or system, it will not have much impact on the value of the dollar.

Alexander Weiss, strategic researcher at JP Morgan, says, 'De-dollarization could lead to disinvestment and decline in confidence in US markets, which would reduce profits. Also, there will be a decrease in dollars in international reserves or more reserves will be kept in other currencies.

Question-7: Why is Trump using tariffs as a weapon? Answer: Tariff is a tax imposed on products exported from other countries. Countries control trade among themselves only by increasing or decreasing it. The country importing the products imposes tariff so that the price of the goods made in the country remains lower than the goods coming from outside. To ensure that tariffs are not imposed higher than the fixed tax, all countries negotiate with the World Trade Organization and decide a bound rate.

Due to America's strong currency i.e. dollar, products purchased from other countries are cheaper. That's why America imports more goods instead of exporting. Due to this, America plays a big role in the foreign trade of many countries.

According to the report of Bureau of Economic Analysis, America has imported more than Rs 30 lakh crore ($352 billion) in September 2024.

If America imposes 100% tariff, then goods from many countries will start selling at double the prices in the American market. Due to this the sales of these goods may reduce. This will affect the foreign exports of many countries. Because of this, tariffs are used as a weapon.

Question-8: If America imposes 100% tariff, what will be its impact on India? Answer: India does more than 17% of its foreign trade with America. America is the largest buyer of Indian agricultural products such as fruits and vegetables. America has also imported 18 million tonnes of rice from India in 2024. In such a situation, if America imposes 100% tariff, then Indian products will start selling at double the price in the American markets. This will reduce its demand among the American public.

——————

Also read this news related to US dollar and BRICS currency….

Bhaskar Explainer- Will Russia-China strategy be able to crush the dollar: India also an important role

Till the Second World War, most countries issued currency of the same value as the gold reserves they had. In 1944, delegates from 44 countries of the world met and fixed the exchange rate of all currencies against the US dollar, because at that time America had the largest gold reserves and was the largest and most stable economy in the world. Read the full news…