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How is the United States Responding to BRICS' Efforts of Expansion and De-dollarization?

  • Yusra Khan (Staff Writer)
  • Mar 3
  • 13 min read

“The idea that BRICS countries are trying to move away from the Dollar while we stand by and watch is OVER,” Trump stated, addressing a major geostrategic shift that the global landscape is experiencing contemporarily. Playing a dominating role in financial operations in countries where it isn’t even the official currency, the dollar’s hegemony is being challenged by BRICS’ (Brazil, Russia, India, China, and South Africa) efforts of expanding and de-dollarizing their international trade owing to their macroeconomic concerns. Practically, this shift might have a huge impact on the future of the Liberal International Order (LIO) and global politics via the relations between various state and non-state actors, geopolitically and economically, ultimately changing the trajectory of international relations. This essay will argue that an already threatened BRICS’ actions pose a threat to the US, which is responding to them by indirect countermeasures like economic resistance, institutional restructuring, and strategic alliance-building to maintain the dollar’s dominance, ultimately impacting its hegemony, the Liberal International Order, and global political economy. It is to be noted that the focus will be on the US’s economic, not diplomatic, response. Firstly, the essay will provide a brief context behind the Liberal International Order, the dollar’s hegemony, BRICS, and their relevance. Secondly, mentioning BRICS initiatives, the essay will draw upon their reasons and their risks to global politics and the US. This will be followed by the US’s economic policy response to the issue and its impact on global politics, before a brief analytical evaluation of the future of the Liberal International Order and BRICS, and finally the concluding remarks. 


The Liberal International Order: A Prevalent Dollar


The ambiguous Liberal International Order (LIO) has numerous definitive perceptions, ranging from Mearsheimer’s pessimistic to Ikenberry’s optimistic, but can be understood in simple terms as an “open and rule-based international order”, initially set by the US in 1945, boosted by the creation of the Bretton Woods system and General Agreement on Tariffs and Trade (GATT).[1] The general logic of the order revolves around the features of openness, loosely set rules, security cooperation, and corrigibility, and has manifested in various transformative avatars since its creation.[2] Moreover, the LIO was globalized with the US’s unipolar hegemony after the Cold War, producing years of US dominance in economic, military, cultural, and political dimensions. To illustrate, the successful integration of China and Russia into the LIO’s significant economic institutions, liberalization, hyper-globalization, and success of the Nuclear Non-Proliferation Treaty (NPT).  However, despite having its “Golden Years” from 1990-2004, the LIO has been facing a decline.[3] This decline has been discussed by numerous scholars like Mearsheimer and Chase-Dunn et al. who believe that the LIO, being a crisis of success contained the sources of its own demise and was destined to fall, but could lead to greater global governance, respectively.[4]


The dominance of the Dollar was one of the outcomes of this order’s rise, which like the order itself, is also being challenged contemporarily.  After the Second World War ended in 1944, the dollar was established in the Bretton Woods Conference and each country pegged their currency to the dollar in a system of exchange rates.[5] This ensured stability in trade and investment, prevented neighbor currency wars, accounted majority of global reserves, and was easily convertible.[6] However, it is speculated that like the LIO’s multipolarity, liberalism, nationalism, and hyperglobalization negatively impacted the order, the dollar also produced shortcomings which will be discussed further. 


An acronym, standing for Brazil, Russia, India, China, and South Africa, initially coined by Goldman Sachs economist Jim O’Neill, BRICS is a group of emerging economies striving for cooperation, improved economic and diplomatic ties, reducing Western dominance, and financial restructuring.[7] Apart from the five, it later included Egypt, Ethiopia, Iran, the United Arab Emirates, and recently Indonesia. Being an agreement-based group, BRICS stands for increased representation in international organizations and decisions, advocating for expanding the United Nations Security Council, strengthening economies of members, reducing dependence on the Dollar, and creating a new financial structure as a parallel to the World Bank and the International Monetary Fund.[8] However, BRICS has shown signs of weakness like internal conflicts on international matters like Russia’s invasion of Ukraine, Indo-Chinese tensions, politico-economic instability in Brazil and South Africa, and historical rivalries between Saudi Arabia and Iran.[9] While this may be true, BRICS is also facing challenges from the dollar’s dominance, for which it has initiated actions, this will now be discussed briefly.  


An Act of Defiance: What is BRICS doing and why?


To understand the actions of BRICS, it is necessary to first acknowledge the reasons behind such initiatives. As indicated earlier, a major prevalence of LIO historically led to increased ideologies, nationalism, globalization, and multipolarity, which resultingly encouraged challenges to the order, and in this case, BRICS’ initiatives. Despite providing its liquid benefits of stability and protection, the Dollar has asserted negative impacts on the macroeconomics of the BRICS countries’ markets. BRICS policymakers have been growingly alarmed over the economic impacts of the dollar on their markets historically, be it Brazil’s exploitation since the fall of Bretton Woods or misuse of Indian stocks and companies.[10] To exemplify, countries like South Africa, China, Argentina, and Egypt faced the risks of currency depreciation, increased interest rates, wealth-seizing, dollar shortages, and increased debts, since 2023.[11] Similarly, the magnetization of capital away from emerging economies markets, increased cost of imports of dollar goods, heavy impositions of financial sanctions on South Africa, and China over money laundering accusations, freezing of dollar assets possessed by Russian citizens regarding its conflict with Ukraine, allegations of currency manipulation on China, reducing international cooperation, increasing oil prices to earn profits from the gulf countries, are a few of the actions by the US where the dollar poses a risk to BRICS.[12]


Considering such dangers of the dollar, the BRICS nations have sought to introduce de-dollarization initiatives like increasing the use of non-western currencies especially the Chinese Renminbi for trade, the proposition of a new currency by President Silva of Brazil, and a new cryptocurrency proposal in 2023.[13]  Another example is India and Russia carrying out oil and defense trade payments in rupee and rubles, surpassing the dollar, likewise Brazil and China’s bilateral trade in yuan. Furthermore, the New Development Bank (NDB) created by BRICS as a parallel to the World Bank is strengthening financial sovereignty by lending in local currencies, notably issuing bond programs in South Africa and Russia.[14] These instances highlight measures by BRICS to quit the dollar dependence and dangers, ensuring economic independence and cooperation. Moreover, membership expansion initiatives include new members in 2024 like Iran, Saudi Arabia, Egypt, Ethiopia, Argentina, the UAE, and Indonesia in 2025, indicating efforts towards global south inclusivity, collaboration, and representation.[15]


In an interdependent world, these efforts, like any international action, have international repercussions, in this case affecting the US, the LIO, and global politics adversely.  


Why/how does this issue matter? 


Simply, BRICS efforts threaten the US’s economic hegemony by suppressing the dollar as the global reserve currency. This can manifest in the form of decreased effectiveness of sanctions, risks in financial stability, loss in flexibility, shifts in the balance of power, and inflationary pressures.[16] The LIO could face an assertive multipolar financial world, challenges to the International Monetary Fund (IMF) and World Bank, affected trade and economic relations between nations, and a redefined non-western global governance incorporating potential inclusivity and cooperation. This could also lead to a redeveloped global politics dynamic with greater global south influence and diminished US economy and integrity, and have a tri-fold effect on public perceptions, states, and non-state actors owing to their interrelation. Moreover, existing alliances of countries with the US could experience the pressure of aligning with either the US or BRICS’s growing influence, mirroring the Cold War alignment issues but on an economic dimension, unlike a military one. Furthermore, increased geopolitical rivalry could manifest, where the US intensifies actions to counter BRICS’ efforts and maintain the dollar’s global influence.[17] In the words of D. Arnold, “A shift away from this universal money-equivalent may offer a new mode of finance for left-wing revolutionary projects.”[18]


A Self-Confident Approach:


The Dollar’s impact on BRICS and vice versa has been intensely discussed, however, its response to BRICS’ efforts of de-dollarization and expansion has not yet been policy-formalized, leaving it open to interpretation. Consulting the three facets of power, it can be interpreted that the US is still considering a decision to deal with its challenges, needs to set an agenda to either take a decision or ignore, and might use pursuable self-profitable thought-controlling of the public as a tool via publications and speeches. Initially, dismissed by numerous US leaders as inconsequential, fueled by a sense of self-confidence, this issue has gained priority considering what is at stake for the US. Nevertheless, there have been transformative indirect economic responses by the US to counter BRICS initiatives, illustrated in various publications, plans, and speeches. To exemplify, the National Security Advisor of the White House, Jake Sullivan, and Treasury Secretary Janet Yellen share perceptions over this issue stating that “Washington doesn’t see BRICS as a geopolitical rival”, and dismissed it.[20] Researchers further stress that no other currency presently provides the liquidity and stability needed across markets, making the dollar's long-standing position in global reserves unparalleled.[21] While some analysts found BRICS’s efforts dangerous to the power of the US economy, indicating a mix of opinions. 


Recently, Trump expressed his views over BRICS de-dollarizing declaring that, “they (BRICS) will face 100% tariffs, and should expect to say goodbye to selling into the wonderful US economy,” where this threat has been his key weapon against socio-economic problems.[22] “We will keep the US dollar as the world’s reserve currency,” considering himself a traditionalist, he added at a rally in September 2024, promising no business with the US, and discussing with his economic advisers regarding creating policies of penalties, export controls, currency manipulation fees, and sanctions.[23] Moreover, to retain global dollar liquidity, the Federal Reserve bolstered exchange lines with major allies, decreasing the attractiveness of other currencies.[24] Furthermore, by lowering inflation, increasing interest rates, and influencing organizations like the International Monetary Fund to preserve the dollar’s hegemony, control lending policies to desist prospective expansion of BRICS, and the development of an alternative payment method by BRICS, the dollar preserves its reliability as a stable monetary value and domination. Moreover, strong resistance from the US has been seen increasingly towards any Global South representation in the UNSC, further depicting the US’s self-centric actions. The dollar could also freeze a country’s dollar holdings, restructure the IMF, and increase cooperation with allies by empowering the use of the dollar in bilateral trade, and fixing internal economic issues like inflation and debt as an act of retaliation to this issue.[25] Additionally, to challenge the digital payment systems put forth by the BRICS, the Federal Reserve has expedited research on a possible Central Bank Digital Currency (CBDC).[26]


These statements elucidate that the US resists BRICS’ de-dollarization and expansion by underlining the dollar’s stability and benefits, financial threats, citing economic inertia, and strengthening economic alliances. This also reveals a self-assured and developing opinion over potential reactions of the US, its mind on global cooperation, Global North and South relations, and that stricter US reactions could have multifold repercussions on the trajectory of global politics, LIO, and the Global South. It is best clarified by Lubin who says, “The dollar is to international finance what the English Language is to international communication.”[27]


What does the future hold?


 The US’s undocumented responses to BRICS’s efforts of de-dollarization and expansion imply multifarious results in global politics. For example, efforts to preserve the dollar’s hegemony enhance the US’s geopolitical power, allowing it to continue enabling sanctions, undermine the voices of growing non-western economies, have greater leverage in trade, and increase global financial control.[28] Moreover, threats of tariffs and other protective measures risk the commencement of trade wars that could disturb global cooperation and markets.[29] It is analytically inferred that this could also trigger global relations realignment with more countries inching away from Western-dominated financial institutions, furthermore, assisting a multipolar world’s creation. The US’s responses could in a way manifest as a double-edged sword; if responded strongly, could negatively impact global cooperation and if ignored the issue, could face a strengthening alternative to a weakening dollar. 


Today, the LIO faces an intersection. With both sides contrasting, the future of the LIO, the dollar, BRICS, and Global Politics seem uncertain. On one hand, de-dollarization indicates a shift towards multipolarity and the emergence of non-western economies, on the other, the IMF and World Bank need to cooperate to integrate BRICS’ views, making the LIO more inclusive. Whereas, differing financial systems could eradicate international cooperation, and the US could face politico-economic adversities and injuries to its global reputation. Nevertheless, it is popular belief that the dollar and the LIO are unlikely to collapse, and could try learning to be cooperative and co-exist with BRICS’ possible small regional currency. Although the US has a history of self-serving actions, that supports the confidence of many analysts in the dollar’s hegemony’s retention and explains why it has ignored BRICS' ambitions in the past, admitting the threats posed by BRICS today seems to be a calculated move, there appear no concrete indications that the US would embrace a multipolar global economy. 


To conclude, this essay has argued that while BRICS acts against the threats it faces from the dollar, its actions in turn welcome an indirect response from the US like economic confrontation, institutional reformation, and calculated alliance-building to retain the dollar’s dominance. This resultingly impacts the Liberal International Order, Global Politics, and the US hegemony in contrasting ways. The essay has initially provided a brief background of the Liberal International Order, the dollar’s dominance, and BRICS before discussing the efforts introduced by BRICS. Secondly, it has mentioned the reasons behind BRICS’ actions and the consequent responses by the US to this issue. Finally, it has analyzed the global impacts of the actions of the US which is followed by a brief assessment of the future of the Liberal International Order, the US, and BRICS. It is understood that BRICS has been facing limitations by the dominance of the dollar in international financial relations like increased debts, currency depreciation, costly imports, and heavy financial sanctions, and has initiated the actions of de-dollarization and expansion to face them through financial independence and regional cooperation. Resultingly, facing challenges by these actions, the US has not officially retaliated but there have been indirect speculations of potential responses of the US ranging from dismissal of the issue to levying 100% tariffs on BRICS. In short, although many nations find the dollar unsettling, the US military's might, its alliances, and the gradual shift in currency power distribution might ensure that the dollar remains the dominant currency in the future. Then again, the strength of a collaboration of growing economies like BRICS, in an increasingly multipolar world, is not to be underestimated. 


Footnotes:

  1. G John Ikenberry, “The Future of the Liberal World Order Internationalism after America,” Foreign Affairs 90, no. 3 (May 1, 2011): 56-+, https://www.researchgate.net/publication/299087832_The_Future_of_the_Liberal_World_Order_Internationalism_After_America.


  2. G. John Ikenberry, “The End of Liberal International Order?,” International Affairs 94, no. 1 (2018): 7–23, https://doi.org/10.1093/ia/iix241.


  3. John J. Mearsheimer, “Bound to Fail: The Rise and Fall of the Liberal International Order,” International Security 43, no. 4 (April 1, 2019): 7–50, https://doi.org/10.1162/isec_a_00342.

  4. Chris Chase-Dunn et al., “LAST of the HEGEMONS: U. S. DECLINE and GLOBAL GOVERNANCE,” International Review of Modern Sociology 37, no. 1 (2011): 1–29, https://www.jstor.org/stable/41421398.

  5. Anshu Siripurapu and Noah Berman, “The Dollar: The World’s Reserve Currency,” Council on Foreign Relations, July 19, 2023, https://www.cfr.org/backgrounder/dollar-worlds-reserve-currency.

  6. Ibid.

  7. Mariel Ferragamo, “What Is the BRICS Group and Why Is It Expanding?,” Council on Foreign Relations (Council on Foreign Relations, October 18, 2024), https://www.cfr.org/backgrounder/what-brics-group-and-why-it-expanding.

  8. Ibid.

  9. Ibid.

  10. Ding Yifan, “What Is Driving the BRICS’ Debate on De-Dollarisation?,” Tricontinental: Institute for Social Research, May 17, 2024, https://thetricontinental.org/wenhua-zongheng-2024-1-brics-debate-dedollarisation/.

  11. Robert Greene, “The Difficult Realities of the BRICS’ Dedollarization Efforts—and the Renminbi’s Role,” Carnegieendowment.org, 2023, https://carnegieendowment.org/research/2023/12/the-difficult-realities-of-the-brics-dedollarization-effortsand-the-renminbis-role?lang=en.


  12. Yifan, “What Is Driving the BRICS’ Debate on De-Dollarisation?”

  13. Ferragamo, “What Is the BRICS Group and Why Is It Expanding?”

  14. Filip De Mott, “BRICS Bank Aims to De-Dollarize Debt by Expanding Local Currency Lending,” Markets Insider, August 22, 2023, https://markets.businessinsider.com/news/bonds/china-brics-bank-dedollarization-dollar-dominance-debt-local-currency-lending-2023-8?utm.

  15. “Financial Express,” Financialexpress.com (Financial Express, January 7, 2025), https://www.financialexpress.com/business/defence-indonesia-joins-brics-a-new-chapter-for-the-grouping-and-its-impact-on-india-3709286/.


  16. Robert Greene, “The Difficult Realities of the BRICS’ Dedollarization Efforts—and the Renminbi’s Role”

  17. Ibid.

  18. Theryn D Arnold, “De-Dollarization and Global Sovereignty: BRICS’ Quest for a New Financial Paradigm,” Human Geography, August 16, 2024, https://doi.org/10.1177/19427786241266896.

  19. Steven Lukes, “(PDF) Power: A Radical View (Second Edition) by Steven Lukes,” ResearchGate, 2005, https://doi.org/10.2307/41802305.


  20. Ferragamo, “What Is the BRICS Group and Why Is It Expanding?”

  21. “U.S. Dollar Faces New Challenges amid BRICS Push for De-Dollarization,” Money Metals Exchange, 2024, https://www.moneymetals.com/news/2024/10/31/us-dollar-faces-new-challenges-amid-brics-push-for-de-dollarization-003579

  22. Ronny Reyes, “Trump Threatens 100% Tariffs on China and Russia If BRICS Group of Nations Issues New Currency,” New York Post, December 2024, https://nypost.com/2024/12/01/us-news/trump-threatens-100-tariffs-on-china-and-russia-if-brics-issues-new-currency/?.


  23.  Ben Norton and Ben Norton, “Trump Threatens to Punish De-Dollarization: ‘I Would Not Allow Countries to Go off the Dollar’ - Geopolitical Economy Report,” Geopolitical Economy Report, September 14, 2024, https://geopoliticaleconomy.com/2024/09/13/trump-threat-punish-dedollarization-dollar/.

  24. Carol Bertaut, Bastian von Beschwitz, and Stephanie Curcuru, “‘The International Role of the U.S. Dollar’ Post-COVID Edition,” Www.federalreserve.gov, June 23, 2023, https://www.federalreserve.gov/econres/notes/feds-notes/the-international-role-of-the-us-dollar-post-covid-edition-20230623.html.


  25. Tridivesh Singh Maini, “BRICS Currency May Not Upstage the US Dollar Anytime Soon,” Thediplomat.com (The Diplomat, December 9, 2024), https://thediplomat.com/2024/12/brics-currency-may-not-upstage-the-us-dollar-anytime-soon/.

  26. Andrew Miller et al., “Design Choices for Central Bank Digital Currency: Policy and Technical Considerations,” Brookings, July 23, 2020, https://www.brookings.edu/articles/design-choices-for-central-bank-digital-currency-policy-and-technical-considerations/.

  27. David Lubin, “US Dollar Dominance Is Both a Cause and a Consequence of US Power,” Chatham House – International Affairs Think Tank, September 12, 2024, https://www.chathamhouse.org/2024/09/us-dollar-dominance-both-cause-and-consequence-us-power.

  28. Maini, “BRICS Currency May Not Upstage the US Dollar Anytime Soon”

  29. Lubin, “US Dollar Dominance Is Both a Cause and a Consequence of US Power”



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