It's the dollar stupid!

An alliance of the nation's friends and foes would like to dethrone the dollar, a financial RIF that would hurt President Trump's political and personal fortunes.

By James O’Shea

In 2001, Jim O’Neill, a British economist at the Goldman Sachs investment banking firm, coined the term “BRIC” for the rapidly growing economies of Brazil, Russia, India, and China. At the time, the term was a handy way to think of four emerging economies with which the world would one day have to reckon.

Now that day of reckoning is growing closer. BRIC has evolved into BRICS+ – a major geopolitical alliance determined to challenge American dominance of global economics and politics symbolized by the status of the U.S. dollar.

Image courtesy of iStockphoto

The growth of BRICS+ from a Goldman Sachs acronym to global alliance caught President Donald Trump’s eye, probably because he fears China, a major force in BRICS+, hopes to flex its economic muscle to dethrone the dollar. The President, earlier this year, threatened BRICS+ countries with his favorite weapon, huge tariffs, if they tried to diminish the power of the Greenback.

But the growing influence of the BRICS+ countries also highlights why the President’s foreign policy baffles America’s friends and enemies and destabilizes financial markets. His Make America Great Again campaign makes no sense.

At a time when the nation needs allies to meet challenges like the one posed by a hostile BRICS+, the administration, packed with MAGA cheerleaders, treats many of the nation’s most trusted allies with barely concealed contempt. Echoing Trump, they advocate a stronger dollar, which makes American exports more expensive and creates headwinds for the American manufacturing renaissance Trump hopes to engender.

To many Americans, any mention of tariffs, BRICS+, or global rivalries involving the status of currencies probably seems like a snore. That’s why one doesn’t see much mention of it in the press. The BRICS+ story involves foreign exchange rates and arcane global economics that don’t seem to have much to do with the price of eggs.

Nevertheless, a BRICS+ challenge to American global power could have a huge impact on the fortunes of American voters; it represents a growing resentment of America’s dominance of world politics, symbolized by the dollar’s status as the globe’s reserve currency.

Indeed, if BRICS+ or any other power could significantly diminish the dollar’s standing on world financial markets, Americans would face hard truths the nation has avoided for decades, such as its mushrooming debt, the wisdom of tax cuts, continuing declines in baby boomer’s IRAs and the ability to sustain important programs such as Social Security and Medicare.

O’Neill first coined the term BRICS to analyze the four huge emerging nations that had more potential than power. At the time, the four nations seemed a looming threat to American interests on the global stage, but not an alliance that would become a political club to challenge America’s stature.

Yet, for better or worse, the club has evolved. As of January 2025, the alliance has grown to ten members and nine partner countries. By some measures, BRICS+ accounts for half of the world’s population and forty-one percent of the global economy. The group generates a larger gross domestic product than the G-7 nations of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. And it controls thirty percent of global oil production and forty-five percent of agricultural output. Some of the original members grew in influence, such as China and India, and some declined, such as Brazil and Russia. And not all members are enemies of America. Some are friends. But they’ve become a club, nonetheless.

There’s no question the alliance would love to dethrone the dollar, something that would reach into the pocket of a president who sees no conflict of interest in mixing his interests with those of his job. BRICS+ positions itself as a counterweight to global financial institutions dominated by America. For instance, it created a New Development Bank which offers members access to capital independent of the World Bank and the International Monetary Fund, both viewed as Western toadies by rapidly growing Global South nations in Africa, Latin America, the Caribbean, and most of Asia.

A central pillar of the alliance’s challenge is a drive for “de-dollarization,” or a reduction of dependence on the dollar in international trade and finance, a goal particularly embraced by China, one of its largest members. The group continues to explore initiatives such as a potential BRICS+ currency and an alternative international payments system that would reduce dependence on the dollar and give the Global South a greater voice in world affairs.

The dollar currently remains the globe’s dominant currency, and the president wants the Greenback to remain that way for reasons that go beyond his political fortunes. A decline in the dollar would represent a symbolic defeat for America on his watch, but it would also hurt the pocketbooks of the president, his family, and his friends.

Earlier this year, the Trump family assumed control of World Liberty Financial, a cryptocurrency and decentralized finance firm with a business plan closely tied to the fate of the American currency.

“World Liberty Financial, inspired by the vision of Donald J. Trump,” the firm’s “Gold Paper” says, “intends to be more than a decentralized finance platform; it’s meant to help secure the future of the U.S. dollar in the digital world.” The firm lists as officials Trump, his three sons, and Steven Witkoff, Trump’s New York real estate developer friend who has become a trotting ambassador at large. WTF has raised $550 million from investors who purchased its tokens.

For now, the dollar seems relatively secure currency despite recent bouts of turmoil caused by Trump’s tariffs and his talk of firing Federal Reserve Board Chair Jerome Powell, an action that sent shudders through world financial markets. The Greenback’s share of global foreign exchange reserves stands at fifty-seven percent as of the third quarter of 2024, according to Chatham House, a highly regarded British research organization. But the dollar share of reserves is down from seventy-one percent in 1999. And many bankers and international financiers project a lower share in the future.

America’s economy remains the strongest in the world, too, but things are changing and not always for the better. The tariffs, coupled with the administration’s dismissive treatment of Ukraine, worry American allies who see the U.S. as an unreliable economic and political partner.

Ironically, the biggest challenge to the BRICS+ goals could be its impressive growth. By adding members with such diverse interests, BRICS+ has evolved into an unwieldy organization that will face challenges bridging gaps in the interests of its far-flung membership.

O’Neill told the Hindustan Times in a February 24, 2025, interview that the alliance has grown without resolving many internal rivalries and tensions that make “de-dollarization” a heavy lift.

To establish an alternative to the American currency, he told the newspaper, the BRICS+ countries must create a general free trade agreement, a thorny issue that two of the BRICS’ larger economies, China and India, have yet to achieve, even though they share a border. “Without such co-operation, O’Neill says, the idea of a BRICS currency remains more rhetoric than reality.” But he’s not saying that “de-dollarization” can’t happen, either.

Events overturned other currencies created by countries that once dominated the world. The British Empire’s pound was the world’s most dominant currency for around 150 years until the dollar displaced it after two world wars, and the United Kingdom’s economy declined.

Although there’s no single currency poised to displace the dollar, a fragmented basket of currencies such as the European Union’s euro, the Chinese yuan, and commodity-linked currencies like the Canadian dollar, which is linked to oil prices, could emerge to partially replace the dollar and diminish its status. That would weaken America’s global power and pose challenges to a dollar-dependent economy already on the brink of a self-induced recession.

The media now focuses heavily on the inflationary impact of the Trump administration’s tariffs, but

The more significant damage of the levies could be the alienation of American allies with policies and tariffs that incentivize them to accept a challenge to the Greenback.

“I think Trump is taking the U.S. down a very dangerous path,” O’Neill told the Hindustan Times. “If he continues using tariffs as a weapon to pressure other countries and boost U.S. trade, it will backfire and weaken America’s economic future. The reality is that the U.S. runs a trade deficit because it saves too little relative to its needs, relying on foreign capital. To fix its trade balance, it would need higher savings or lower domestic spending – something at odds with Trump’s promise of real rising incomes.”

O’Neill, who became a Lord in the British parliament in 2015, told the newspaper that the world could likely see a shift in the global monetary system if the BRICS+ countries eventually surpass the size of the American economy.

Unease about the dollar already destabilizes financial markets worried about Trump, his tariffs, and the fate of Fed Chair Powell. Normally, when stock prices slump, as they have in recent weeks, investors pile into gold, the dollar, and U.S. Treasury bonds, long seen as the world’s safest investment. In the recent market routs, though, investors didn’t snap up U.S. bonds. That suggests a lack of confidence in dollar-denominated securities.

“If Trump aggressively pursues tariffs,” O’Neill said, “he could push other countries into new alliances – especially China and India. If those two economic giants worked together, they could reshape global trade and make U.S. tariffs irrelevant. In that scenario, the rest of the world could simply shrug and let America isolate itself.”

—James O’Shea

James O’Shea is a longtime Chicago author and journalist who lives in North Carolina. He is the author of several books and is the former editor of the Los Angeles Times and managing editor of the Chicago Tribune. Follow Jim’s Substack, Five W’s + H here.