In Brazil, government sources say President Luiz Inácio Lula da Silva is considering abandoning the idea of a common BRICS currency, even as Brazil prepares to chair the group’s 17th summit in July 2025. The potential about-face raises questions about the future of de-dollarization and the cohesion of the BRICS bloc. This article explores the reasons for Brazil’s hesitation, Donald Trump’s opposition, and the implications for the dominance of the U.S. dollar.
Brazil: Prioritizing Ending Dollar Dependence, Not New Currency
While creating a BRICS currency was seen as a way to reduce dependence on the U.S. dollar, Brazil now appears to be favoring other approaches. According to Reuters sources, Brazil wants to propose alternative solutions for international trade at the BRICS summit that would bypass the dollar without creating a new currency. This approach could involve increasing the use of local currencies in bilateral trade, or developing alternative payment systems.
This strategy is partly explained by the complexity and challenges of creating a common currency for a group as diverse as the BRICS. The member countries’ economies have divergent levels of development and interests, making it difficult to harmonize monetary policies and establish a common financial infrastructure. Brazil, keen to maintain its economic stability, may prefer a more pragmatic and gradual approach to reduce its dependence on the dollar.
Trump and the BRICS: Tariff threats and the fragility of the alliance
Donald Trump’s opposition to de-dollarization could also play a role in Brazil’s decision. According to Reuters, the BRICS are under pressure from Trump, who has reportedly threatened to impose tariffs if member countries abandon the US dollar. This threat, although not officially confirmed, shows the determination of the United States to defend the dollar’s dominant position in the global financial system. Russia and Iran are developing partnerships with the United States, which could help them.
The divisions within the BRICS over the common currency are also evident. India, for example, has also expressed reservations and favors the use of the US dollar for cross-border transactions. Only Russia, China, and Iran appear to actively support the creation of a BRICS currency, mainly because of the economic sanctions they are subject to or their ambitions to dominate global finance. These differences highlight the fragility of the alliance and make the future of the common currency project uncertain.
