SA’s presidency of the Group of 20 (G20), a club including the world’s wealthiest nations, got off to a rocky start at the weekend after US president-elect Donald Trump threw down the gauntlet to the Brics bloc.
Trump said on social media that Brics countries — including SA — would not trade with the world’s largest economy if the bloc tried to replace the dollar as global reserve currency.
The expanded Brics+ bloc has arguably been the engine of global economic growth in recent years, accounting for about 37% of the world’s GDP. However, SA is also a major beneficiary of the US African Growth & Opportunity Act (Agoa) which facilitated duty-free access to the US market for more than $3bn (R55bn) worth of the country’s exports in 2022 alone, mainly motor vehicles, fruit and wine.
SA officially took over the G20 presidency from Brazil on Sunday and President Cyril Ramaphosa is expected to formally launch it this week.
After his recent electoral victory against outgoing US vice-president Kamala Harris, an invigorated Trump took to social media on Saturday to post that the idea of the Brics countries moving away from the dollar “while we stand by and watch” was unacceptable.
“We require a commitment from these countries that they will neither create a new Brics currency nor back any other currency to replace the mighty US dollar, or they will face 100% tariffs, and should expect to say goodbye to selling into the wonderful US economy. They can go find another ‘sucker’!
“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,” Trump said in an X post.
The dollar is the most used currency by far in global business and trade, and Brics nations such as Russia and China have called for the bloc to challenge the dollar’s status as the world’s reserve currency.
A proposal for a Brics currency was introduced at the Brics Business Council in Johannesburg in August last year. However, briefing the gathering at the time, Standard Bank group CEO Sim Tshabalala said “little progress” had been made, or even in determining whether a Brics currency was feasible or desirable.
Cas Coovadia, the CEO of Business Unity SA, which represents almost all big businesses in the country, said SA would have to wait and see what Trump’s policies were when he took over from Joe Biden in January.
“He only takes over in January. But at the end of the day the US is still an important trading partner, so we have to be pragmatic in how we deal with him and protect what’s good for our country,” Coovadia said.
He said the business sector continued to engage with American organisations and business bodies “to get a sense of what’s happening. We are a small country with a small economy. We’ve got to protect our economy and our exports to the US.”
SA’s newly appointed ambassador to the US, Ebrahim Rasool, who will be going to the US next month for his second stint in the position, told Business Day last week that SA saw the US as its “trade and investment partner of choice”.
Earlier this year the US House of Representatives instituted a full review of bilateral relations between the US and SA, triggered by perceptions that SA had abandoned its nonaligned stance and deepened ties with China, Russia and Iran.
International relations & co-operation minister Ronald Lam- ola’s spokesperson, Chrispin Phiri, said Brics countries were not planning to create a new currency. “The discussions within Brics focus on trading among member countries using their own national currencies.
“SA supports the increased use of national currencies in international trade and financial transactions to mitigate the impact of foreign exchange fluctuations, rather than focusing on de-dollarisation,” Phiri said.
“The strengthening of correspondent banking networks and the development of infrastructure for settlements in national currencies could further this aim. The National Treasury has emphasised that enhancing Brics payment systems to accommodate trading in local currencies does not imply de-dollarisation,” he said.
However, in October Russian President Vladimir Putin accused Western powers of “weaponising” the dollar, arguing at a Brics summit in Kazan that sanctions against Russia since its invasion of Ukraine “undermine the trust in this currency and diminish its powers”.
Trump’s threat of steep tariffs on US imports from Brics countries follows similar threats made to Mexico, Canada and China as the president-elect made clear that he intends using punitive measures to force US trading partners to comply with his demands.
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