South Africa rejects reports of BRICS currency amid tariff threat

South Africa has refuted claims that the BRICS economic bloc is planning to establish its own currency. 

This denial follows a warning from U.S. President-elect Donald Trump, who threatened a 100% tariff on BRICS nations if they attempt to create an alternative to the U.S. dollar.

The South African Department of International Relations and Cooperation (DIRCO) attributed the confusion to “recent misreporting,” which suggested that BRICS countries aimed to replace the dollar as the primary currency for trade among members.

In a post on the social media platform X, Trump demanded that BRICS nations commit to not creating a new currency or supporting any currency intended to rival the U.S. dollar.

Alongside the tariff threat, he cautioned that these countries would risk losing access to the U.S. market.

In response, South Africa emphasised that discussions within BRICS focus on enhancing trade using national currencies rather than pursuing a de-dollarisation agenda.

“South Africa supports the increased use of national currencies in international trade and financial transactions to mitigate the impact of foreign exchange fluctuations,” stated DIRCO.

The department highlighted the importance of strengthening correspondent banking networks and developing infrastructure for settlements in national currencies.

Despite being a key member of BRICS, South Africa maintains substantial trade ties with the United States.

The country benefits from preferential access to the U.S. market under the African Growth and Opportunity Act (AGOA), which is crucial for its economy.

Concerns about U.S.-South Africa relations were heightened in May 2023 when allegations surfaced regarding South Africa supplying weapons to Russia, leading to a significant decline in the local currency.

An internal investigation later cleared South Africa of wrongdoing, but observers stress the importance of maintaining good relations with the U.S. 

Trump's tariff threats extend beyond BRICS, as he also plans to impose new tariffs on Canada, China, and Mexico upon taking office.