Donald Trump does not seem to get along with the old Pax Americana. This term refers to the hegemonic order established by the US after the Second World War in its hemisphere of influence, the Western one – which ended up moving to the rest of the planet with globalization and the end of the Cold War -, judging by the trickle of tariffs. of punishment that he intends to apply from the very beginning of his second term and that would confirm that the rates – as he assured – “are the best of the meanings that exist in the dictionary.”
The armed struggle of the future tenant of the Oval Office against the freedom of commerce points to a declaration of universal war against commercial transactions. Because between the two mentioned above, almost half of the 8,000 million people who inhabit the Earth would be affected by their tariff increases.
The threat not only tags nations, friend or enemy, to sometimes triple the entry rates of their goods and services into the American market, but would spread to blocs such as the BRICS + (Brazil, Russia, India, China, South Africa, the five members who identify the acronym with their initials, in addition to Egypt, Ethiopia, Iran and the United Arab Emirates, who joined the club in the summer of 2023). In this way, it would cease to be a reaction against economies that, as he argued in his first term, have contributed for decades to increasing the billion-dollar trade deficit of the United States, and would become a crusade against the most powerful emerging markets, which aims to fight in duel against Washington and snatch world hegemony from it.
If consummated, the Republican Administration would fully enter into a geostrategic rivalry. And the Trump 2.0 version will not have the complacency of 2018, when he undertook the escalation of tariffs on steel and aluminum that later lit the fuse of new tariff increases for countries like China, Mexico, Canada or the EU – the same poker that now he wants to reissue – on issues as inconsistent as the alleged subsidies to Airbus that triggered tense disruptions in other sectors.
In Europe, for example, several agricultural headings were boosted, which rose by up to an additional 25%. Like fresh cheese, olives or olive oil that especially affected Spain; wines and cheeses to France and Italy; coffee, cookies and waffles to Germany and whiskey and sweets to the United Kingdom. Without the institution that ensures free trade, the WTO, taking any urgent punitive action against Washington. The arbiter of globalization is still in the ICU, convalescing since 2018, and could live his last months at the mercy of the falcons commercials who will lead Trump’s economic team under the auspices of Project 2025 of the ultra-conservative Heritage Foundation with a marked protectionist component to give free rein to the Make America Great Again (MAGA) the reinforced motto of the America, firstwhich the Grand Old Party (GOP) has taken over.
The ‘Trumpist’ order to emerging markets
It has been Trump himself who has singled out the BRICS + by advancing a 100% tariff imposition on countries that “dare” to renounce the dollar as a currency for commercial use. He greenback American currency lost 8% of its weight in international currency reserves in the first months of the invasion of Ukraine. Despite the decision of the US and the entire G-7, the forum that rivals the BRICS+, to prohibit the Kremlin from using the dollar as a means of payment in international transactions. The muscle of the American currency went from representing two thirds of the stock of foreign currencies that central banks control to weather episodes of bankruptcies and attacks on their currencies in 2003, to 55% in 2021 and up to 47% in 2022. erosion of “deepest depth” greenback in the market” throughout this century, they said then at Eurizon SLJ Asset.
However, since last spring, for reasons that the market attributed to the risks of decoupling of globalization, polarization in the US – with slander warcivilists-, Europe -with the Franco-German axis at serious political crossroads this autumn-, or in points with proven stability -South Korea- and, above all, the victory of trumpismthe price of the dollar has skyrocketed again. Until reaching parity with the euro again, and dealing severe setbacks to the pound, the yen and other industrialized and emerging currencies; including the renminbi, the international version of the yuan that operates under a strict fluctuation band, never declared by the Chinese monetary authority.
Trump specified that the tariff reprimand will be activated “against any nation that finds alternatives to the dollar” and mentioned in this context the BRICS+ that “are trying to get out of the orbit” of the greenback “waiting for the right moment.” The message, issued on its Truth Social network, “requires” its nine partners “an express commitment” that “they are not going to create their own currency,” nor “monetary attempts to replace the dominance of the dollar” if they do not want to “ Say goodbye to selling in the wonderful American market.”
“It is not a good strategy, because it elevates to the status of threat a declaration of intent that Brazilian President Luiz Inázio verbalized more than a year ago.” Lula da Silva, and implies a lack of confidence in the dollar,” writes Brad Setser, in account X of the CFR, the Council on Foreign Relations, who warns, on the contrary, that “the shot could backfire.”
Setser, an American economist and former Treasury and Commerce official, points out that forcing certain markets to use the dollar is a “disservice” to American diplomacy because coercion “will end up weakening the global muscle of the dollar and its hegemony as a unit of use in energy markets, other raw materials or in international trade.”
Deutsche Bank also supports the same thesis. Their experts add that the strength of the American currency “will not sit well with its economy” and recall that, in Trump’s first term, the Treasury “favored a greenback below the market value” to strengthen its foreign sector, although it never admitted a weak dollar policy, as has always happened in its history. No administration – not even the Federal Reserve – has ever acknowledged having let the price of its currency fall.
The monetary order shows a tense calm
Many of the reasons that have caused anger trumpist against the BRICS + is attributed, by international observers, to the cheers against de-dollarization that were heard at the October meeting they had in Kazan, in which Vladimir Putin’s criticisms against the weaponization of the dollar in the markets. The use of greenback as a diplomatic weapon against the geostrategic enemies of the White House – and the consequences that Washington can impose – is also behind the delay in accepting Saudi Arabia’s entry into the BRICS + or the silence of Turkey, invited to Kazan, but a member of the NATO, .
And, in the opposite sense, the rejection of Javier Milei’s Argentina to any “alignment with communists”, because “our geopolitics is with the US and Israel.” The Argentine central bank has already undertaken, in fact, the transition towards the loss of monetary sovereignty for the benefit of the Fed by already operating with banks and credit card firms so that they begin to denominate their services in the US currency, according to its admission. governor, Santiago Bausili in line with Milei’s slogan last summer of adopting the greenback to get the country out of an endemic and unhealthy hyperinflation, which has raised the CPI to an average rebound of 62% since 1945.
The double standard of dollar dominance
Even so, voices like Mochael Pettis, from the Carnegie Endowment, recall that the dollar is “so persuasive” for countries and the international financial order due to “the voluntariness of countries in choosing it as a payment method in their international economic transactions.” and by the size, liquidity and depth of Treasury issuances in the bond markets, which are used largely to defray American deficit spending. “The US is the only nation that offers unhindered access to its financial markets and is capable of managing such an excessive imbalance in its trade balance without its currency losing global leadership.”
In his opinion, the BRICS + “have few options to achieve” this status. Although he advises them to “wait” and not confuse the wishes of the coming administration with their conceptual errors about free trade and the capitalist system. “Maintaining dominance of the dollar is inconsistent with Trump’s stated policy of trade protectionism.”
At ING they remember that the SWIFT payment platform, the most used in foreign business and banned for Russia in the first set of vetoes after invading Ukraine, has increased the weight of the greenback in its transactions from 2016 to 2024. In addition to emphasizing that It is the currency in which sovereign and corporate debts, interest or investment portfolios and high-risk products that pushed the credit collapse of 2008 are paid.
While Alan Wolff, from the Peterson Institute, warns about lawsuits against Trump’s free trade, without clear rules of the game in his trade policy and at UBS, with this argument, he advises his clients to reduce their exposure in dollars due to the extreme overvaluation of the greenback in the short term.
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