BRIC by BRIC, de-dollarization only a matter of time

At a campaign rally in Wisconsin, US presidential candidate Donald Trump stepped up his America First campaign earlier this month by vowing to impose 100% tariffs on goods from any nation that shifts away from the dollar.

Trump did not tell his supporters that the measure to protect the dollar would be painful for American households, with many consumer goods likely to double in price. Around 70% of products sold at Walmart and Target are sourced from China, the nation at the forefront of de-dollarization.

Trump made his announcement on the eve of the highly anticipated annual BRICS summit, scheduled for October 22-24 in Kazan, Russia. Crucially, the meeting may announce a roadmap for developing an alternative to the current dollar-centric global financial system.

Details are still scarce but some observers expect the meeting will announce a multicurrency payment platform. Some BRICS watchers even predict the announcement of a roadmap for a gold-backed BRICS trading currency.

Bretton Woods

The creation of an alternative to the current dollar system would be historic for several reasons. It would mark the first credible attempt to move past the 1944 Bretton Woods Agreement that established the postwar global financial system.

Under Bretton Woods, the dollar was tied to the fixed price of gold while all other currencies were pegged to the dollar. Nations with dollar-denominated trade surpluses could exchange their dollars for gold with the US central bank at the so-called gold window.

The dollar system created financial stability but gave the US near total control over the global financial system. US banks became the clearinghouses for global trade. A Japanese company buying goods from India had to buy dollars to pay its