Trump advisers discuss penalties for countries that refuse to use the dollar – Business

Economic advisers to former President Donald Trump are considering ways to actively stop countries from abandoning the dollar if he returns to the White House for a second term. It is an attempt by the US to counter moves among key emerging markets to reduce their exposures to the US currency, according to people familiar with the matter cited by Bloomberg.

The discussions include penalties for allies or adversaries that actively seek ways to engage in bilateral trade in currencies other than the dollar, with options discussed including export controls, currency manipulation fees and tariffs, the agency sources said.

The verbal backlash against the dominance of the dollar in the global financial system gained momentum in 2022, when the US began imposing harsh economic sanctions on Russia, a member of the G20. Since then, the Russian Central Bank, government officials and about 2,500 other entities have had limited access to dollars.

Earlier this week, current President Joe Biden signed a law giving him new powers to seize Russian dollar assets to help rebuild Ukraine. The so-called REPO provision was added to the national security package to help Kiev and other US allies that was voted on by both houses of Congress. The measure has alarmed many Republican lawmakers, who worry it will undermine the U.S. dollar’s role in the global financial system.

Brazil, Russia, India, China and South Africa, collectively known as the BRICS countries, discussed de-dollarization at a summit last August. The group is gaining global weight after inviting key oil-producing countries such as Saudi Arabia and the United Arab Emirates this year, along with other countries in a bid to expand it. Saudi Arabia and the UAE currently peg their currencies to the dollar, Bloomberg reminds.

Trump’s economic advisers and people in his campaign have talked about taking action against this particular BRICS effort in a possible second term as president. For his part, both publicly and in private, Trump has often said he wants the dollar to remain the world’s reserve currency.

“I hate it when countries abandon the dollar,” Trump said in an interview with CNBC on March 11. “I would not allow countries to abandon the dollar, because when we lose this standard, it will be like losing a revolutionary war. It will be a blow to our country,” he noted.

As president, Trump pushed for a forced weakening of the dollar to support the domestic manufacturing sector. But as of now, he has said personally that he does not see the benefits of intervening on the value of the dollar, one of Bloomberg’s sources said.

“With Biden, you’re going to lose the dollar as a standard. It’s going to be like losing the biggest war we’ve ever lost,” he said, blaming Joe Biden’s policies for damaging the dollar.

Trump favored a stable dollar, with other countries following that policy, refraining from interventions aimed at devaluing their currencies. With the Federal Reserve holding off on starting to cut rates, the dollar has recently appreciated, prompting authorities abroad to consider interventions to support rather than devalue their currencies.

Japanese and South Korean authorities were among those warning against excessive movements in their exchange rates, with officials in Tokyo stressing they reserved the right to intervene.

Earlier this week, however, Politico quoted former Trump trade adviser Robert Lighthizer and several of his political allies as saying they would seek to make American trade more competitive by purposefully weakening the dollar under a new presidential term. Trump.