Incoming president Donald Trump has shaken up the political realm with a poignant threat to BRICS member states, one which may have adverse effects on South Africa’s AGOA deal.
Donald Trump targets BRICS: Here’s what he said
The Republican choice to replace outgoing President Joe Biden is a month away from returning to the White House and part of his first order of business is securing the value of the US dollar.
On Saturday, Trump lashed out at BRICS, an intergovernmental organisation made up of nine countries, for spearheading a move to develop a new currency that would, in effect, replace the US dollar in trade.
“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER,” Trump shared on his socials.
This is the first direct response from the United States (US) on the outcomes of the 2024 BRICS Summit, where the founding member states, Brazil, Russia, India, China and South Africa, led discussions about the formation of the ‘Unit’, a new currency of trade that would aim to dethrone the US dollar as the global standard in commerce.
Currently, the US dollar accounts for about 90% of all trade, and according to Russia’s President Vladimir Putin, introducing the BRICS banknote into global trade would nullify the US’s weaponisation of the currency.
“The dollar remains the most important tool in global finance but using it as a political weapon undermines trust in the currency. If they block us, we’ll find alternatives,” Putin warned at the time.
Trump, on Saturday, made it abundantly clear that under his administration, which officially kicks off after his inauguration on 20 January 2025, “there is no chance that the BRICS will replace the US Dollar in International Trade, and any Country that tries should wave goodbye to America.”
The latter end of that threat rings loud for South Africa, which enjoys a healthy bilateral relationship with the US.
While Trump’s post was not specifically aimed at South Africa, it did leave enough subtext to raise concerns about the AGOA deal.
The African Growth and Opportunity Act (AGOA) is a significant trade agreement established by the United States.
Enacted on 18 May 2000 as Public Law 106, AGOA aims to foster stronger economic ties between the US and qualifying countries in Sub-Saharan Africa (SSA).
Currently, the AGOA/GSP program offers duty-free access to the US market for approximately 6 500 product tariff lines. These include newly added “AGOA products” such as:
- apparel;
- footwear;
- wine;
- selected vehicle components;
- various agricultural products;
- chemicals;
- steel; and
- many others.
This trade act has been prolonged until 2025 and the next authority with the power to extend the deal is none other than… Trump.
According to the 47th US President, countries that fail to explicitly pledge allegiance to the US dollar “will face 100% tariffs, and should expect to say goodbye to selling into the wonderful US economy.”
“They can go find another “sucker!” he exclaimed.
The BRICS member states have yet to respond to Trump’s threat.
