Shaktikanta Das reacts to Trump’s tariff threats; dismisses de-dollarization attempts by India

RBI Governor Shaktikanta Das addressed concerns over US President-elect Donald Trump's 100 per cent tariff threats, saying that it is too early to react and that it would be better to wait for more clarity on any potential policy.

In a rather stern warning to the BRICS nations—Brazil, Russia, India, China, and South Africa—on December 1, Trump had threatened 100% tariffs on their exports to the United States if they pursue efforts to replace the U.S. dollar in global trade.

On a query on the same, Das said, "Let the policy come first."


Meanwhile, deputy Governor Michael Patra said that if such tariffs were to happen, they would likely not be an isolated event and could trigger a series of responses, including potential retaliation, possibly through currency moves.

“So at this point, it is very difficult to say what will be a natural move and it is better to wait for the general equilibrium.,” Patra explained.

Addressing recent media speculation, Das acknowledged that the idea of a BRICS currency had been discussed by member countries, but pointed out that no decision had been made on the matter.

"The geographical spread of the BRICS nations is also a factor to consider. Unlike the Eurozone, which has a single currency due to geographical contiguity, BRICS countries are spread across different regions, and that presents challenges," Das said.

On concerns about de-dollarization, the RBI governor reassured that India had not taken any measures aimed at reducing its dependence on the US dollar. He said that India’s initiatives, such as the opening of special vostro accounts and entering into agreements for local currency trade with a few countries, were aimed at de-risking the economy from the potential volatility of the dollar's appreciation and depreciation.

"We have permitted opening of vostro accounts and entered into local currency denominated trade agreements to reduce our dependence on one currency. This is not about de-dollarization, it is about de-risking of our trade," Das explained.

What Trump said

In a post on X (formerly Twitter), Trump said that any attempt by BRICS to create a new currency or support alternatives to the dollar would lead to severe consequences. “The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is OVER,” Trump wrote.

Trump’s warning comes on the heels of last month’s BRICS summit in Kazan, Russia, where the bloc discussed strategies to boost non-dollar transactions and enhance the use of local currencies.

He reiterated that BRICS nations must commit to doing away with such efforts or face not only crippling tariffs but also the potential loss of access to the U.S. market altogether.

“They can go find another ‘sucker!’” Trump said while adding, "There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America."