Menon said the bigger takeaway from recent developments is that the US is becoming an unreliable trade partner. This view was echoed by Rahul Chhabra, Former Secretary of Economic Relations at the Ministry of External Affairs, who pointed out that America’s share in global trade has been in secular decline—from 15% in the 1970s to just 9% today. “There’s already a secular decline, and this trend is further on its way down,” Chhabra said. He noted that while the US remains significant, the time has come for BRICS nations to actively explore other trade blocs.
On the issue of de-dollarisation, Chhabra clarified that BRICS is not moving towards a common currency, but alternative payment mechanisms are under serious discussion, especially in light of US sanctions on Russia. “The move began even earlier, but it was accelerated by those sanctions. Countries are now realising there needs to be an alternative to SWIFT,” he said.However, internal divisions continue to prevent BRICS from pushing forward on key initiatives. Pramit Pal Chaudhuri, Head of Asia Practice at Eurasia Group, said that while countries like Russia, China, and Iran advocate for an anti-Western stance, others like India, Brazil, Egypt, and Indonesia prefer a non-aligned, Global South-oriented platform. “This division prevents BRICS from getting anything substantive done. A lot of statements are made, but there isn’t much beyond that,” he said.
Chaudhuri also noted that recent BRICS proposals like a gold-backed currency and a blockchain-based SWIFT alternative were rejected, largely due to opposition from India and Brazil. Both countries are wary of initiatives that may tilt power towards China.
Menon added that the US concern stems from the potential erosion of its sanction power, rather than the threat of losing its reserve currency status. “An alternative payment mechanism like China’s CIPS could allow countries to bypass US-led sanctions,” he said. While bilateral trade in local currencies like rupees or yuan makes sense, Menon said, no currency currently poses a real challenge to the US dollar’s role as a global reserve. “The dollar may be losing influence slowly, but it’s not going away,” he added.
The comments come in the wake of Trump’s aggressive trade moves against BRICS members, including a 50% tariff on Brazilian imports and tariff threats against South Africa and Indonesia. The group recently condemned rising protectionism in a joint declaration, calling such trade barriers inconsistent with WTO norms.
Below is the excerpt of the discussion.
Q: What’s your sense? Do you think after these threats imposed by Donald Trump, where he has said that there will be an additional 10% tariff on BRICS nations, the future cooperation of BRICS now faces a question mark?
Menon: I don’t think so. I don’t think anyone should respond to flippant threats from this US administration in any serious way. We’ve heard a lot of this before. We heard about a 100% tariff before—then April 2nd reciprocal tariffs were introduced. In his early days he talked about a 100% tariff on BRICS nations. Now it’s an additional 10%. Let’s wait and see what happens. I think this is a very erratic and unpredictable environment, and it should not influence individual countries in their serious decisions about how they go about their trade and investment with each other.
In fact, I think in the long term, the lesson from this episode with the Trump administration is that the US has proven itself to be an unreliable trade partner. It’s an important trade partner, but in the longer term, it is unreliable if it continues along this path.
So, there is a need for groupings like BRICS to look at increasing integration amongst themselves, pursuing new options, diversifying their trade patterns, and reducing their reliance in order to reduce risk on an unpredictable trade partner.Q: Ambassador Chhabra, coming to you—do you feel that it’s only de-dollarisation that Donald Trump is worried about, or is it the emergence of alternate payment systems? Because BRICS nations and many other groupings do not want to put all their money or all their reliance on SWIFT.
Chhabra: Yes, exactly. I couldn’t agree more, firstly, with what Professor Jayant Menon mentioned, because we must keep in mind that the US as a percentage of global trade was 15% in the 1970s. Today, it is 9%. So, there’s already a secular decline, and this trend is further on its way down.
So only that much importance can be given to statements made in such an arbitrary and erratic manner. It is still important—9% of global trade is a huge power bloc. But, as the professor mentioned, I think there will be more movement towards trading with other blocs.
Coming to your issue on de-dollarisation—yes, people are mixing it up with an alternative currency. I don’t really see BRICS having its own currency in the long run, but alternative payment mechanisms—because of the US sanctions against Russia—are definitely under discussion. That’s how it began. The move began even earlier, but it was accelerated by those sanctions. Countries are now realising that there needs to be an alternative to SWIFT. And again, the move towards that is gaining strength, both ideologically—countries getting more attuned to it—and practically, with mechanisms being discussed. The New Development Bank coming up is also another symbol of that momentum.
Q: Pramit Pal Chaudhuri, what’s your concern here? Is Donald Trump worried that this is a China-led grouping which is gaining prominence and growing year on year? This year, for example, you had Belarus, Bolivia, Kazakhstan, Cuba, Nigeria, Malaysia, Thailand, Vietnam, Uganda, and Uzbekistan all becoming members of BRICS.
Chaudhuri: There is, obviously, within the American right wing, a concern that the BRICS was designed—as Trump says—as an anti-American alignment. That is simply not true. Most of the countries don’t really support that narrative. Egypt and Indonesia, for instance, are not at all interested in having BRICS become an anti-Western or even anti-American organisation.
Keep in mind that the BRICS attempts to create a gold-backed BRICS currency, proposed by Russia, and the creation of a BRICS blockchain to bypass the SWIFT payment system, were both shot down in the last two BRICS summits. The two countries that led that rejection were India and Brazil. Both argued that they do not support de-dollarisation and were concerned—especially India—that such moves would effectively make China the dominant player in these spaces.
So, BRICS continues to be internally very divided on this issue—between a group that is, quote, anti-American (Russia, China, Iran), and another group that wants it to be a voice for the Global South or emerging economies but wants to maintain it as a non-aligned movement. This division prevents BRICS from getting anything substantive done. A lot of statements are made, but there isn’t much beyond that.
Q: Professor Menon, if I were to ask you about the threats to the United States posed by BRICS—yes, there is talk of greater settlement in local currencies and a BRICS payment system. India has repeatedly said there is going to be no BRICS currency. Russia has spoken about it in the past, but it has not found support. Why is the United States worried about the emergence of an alternate payment system? Is there a fear that a China-dominated payment system may hurt the American economy?
Menon: I think the concern is that it would take away a lot of the monopoly power that the US currency currently enjoys in managing sanctions, which it imposes on countries of its choosing. So, an alternative payment mechanism to SWIFT—like China’s CIPS—could allow countries to bypass US-led sanctions.
SWIFT is still the most widely accepted and used system, and its dominance enables the US to enforce financial sanctions effectively. If alternatives become viable, that power could diminish. But I think, as my co-panelists mentioned earlier, we need to distinguish between a payment system and a global reserve currency.
I don’t think the US dollar will be replaced anytime soon as the global reserve currency. Countries should, as much as possible, use other currencies, especially in their bilateral trade there is no reason why they shouldn’t use one of their own currencies. If India trades with China, it could be in rupees or yuan. There’s no reason to always use the US dollar. But that’s different from a reserve currency, which is used for transactions between countries using a third-party currency like the dollar. No currency—not even the euro—is currently positioned to challenge the dollar’s dominance in that role. So, while the dollar may be losing influence slowly, it’s not going away. And I think that’s what Trump is particularly concerned about.
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