Last Saturday (November 30), through his social media platform Truth Social, Donald Trump threatened to impose up to 100% tariffs on products from BRICS member countries if they abandon the U.S. dollar as the currency for trade settlement.

This threat directly targets Chinese exports, particularly in electronics, and highlights the use of tariffs as a geoeconomic tool. [1] Such rhetoric underscores the global transition from a neoliberal order, focused on market efficiency and interdependence, to a new geoeconomic order, in which economic instruments are used to protect strategic interests and shape international relations.

This shift, accelerated by events such as the COVID-19 pandemic, the war in Ukraine, and the ongoing Sino-American tensions, redefines global economic priorities, replacing cooperation with strategic competition. For China, Trump's threats amplify existing economic and geopolitical challenges, demanding swift and strategic responses if it wishes to safeguard its global position.

Donald Trump's proposal to impose up to 100% tariffs on goods from BRICS countries represents a direct threat to China's export-driven economic model. This model remains heavily dependent on global markets, particularly for electronics and technology: the tariffs could significantly reduce Chinese exports and slow economic growth by up to 4% in 2025.

In response, Beijing is likely to intensify the geographical diversification of its exports, redirecting goods to markets in Southeast Asia and Latin America while also employing transshipment strategies via third countries. Additionally, China could implement countermeasures such as currency devaluation of the renminbi (RMB) and economic stimuli packages to mitigate part of the impact.

However, these policies face structural limitations and could exacerbate internal issues, such as capital flight and corporate debt.

Even before Trump's initial tariff threats in 2018, China had already intensified its de-dollarization strategy to reduce the vulnerabilities it faced from U.S. economic pressures. This strategy included the creation of the CIPS (Cross-Border Interbank Payment System) in 2015 - an alternative to SWIFT - and expanding Offshore RMB Centers in locations like London and Singapore, enabling RMB transactions outside mainland China.

There have also been efforts to implement currency swap agreements, which facilitate direct currency exchanges between central banks. These agreements promote the use of RMB for trade settlements without relying on the dollar as an intermediary. Below are two examples of such agreements, which closely resemble the recent agreement signed by the Brazilian Development Bank BNDES and the Chinese CDB (China Development Bank) in November 2024.

China-Japan: A 200-billion RMB ($30 billion) agreement that reduces costs and facilitates direct trade.

China-EU: A 350-billion RMB ($50 billion) agreement that promotes using RMB in trade and financial transactions with European countries.

Thus, Trump's tariff threats economically pressure China to accelerate its strategy of de-dollarization and RMB strengthening. While this strategy faces short-term challenges, it contributes to reshaping the international financial system in the long term, weakening the dollar's dominance and enhancing China's financial autonomy amid growing geoeconomic and geopolitical rivalry. [2]

Although Trump's proposed tariffs aim to protect American industries, their adverse impacts would be significant. Sectors heavily reliant on Chinese imports, such as technology and renewable energy, would suffer from higher production costs, which would drive inflation up and reduce the global competitiveness of U.S. industries.

Moreover, Chinese retaliation could include restrictions on the export of rare earth materials—critical to producing semiconductors and technological equipment—and sanctions targeting U.S. companies.

Economic isolation caused by protectionist policies would also encourage strengthening Regional Blocs and alternative financial networks, such as those promoted by China and BRICS, further undermining U.S. monetary hegemony.

Trump's latest threat of elevating tariffs symbolizes the advent of a new geoeconomic order in which economic coercion replaces cooperation as a tool for global influence. For China, these threats represent immediate challenges but also opportunities to strengthen its institutional bypass strategy and expand its financial impact.

However, escalating trade tensions and the fragmentation of the global financial system create high instability, which has negative impacts on both countries.

Transitioning to a multipolar global economy demands strategic and cooperative responses, but the current political landscape reduces the likelihood of collaborative solutions. In this context, strategic competition defines the new dynamics of the global economy, challenging the current power balances and shaping an uncertain future.

Notes

[1] Geoeconomic Tool refers to a State or political actor's strategic use of economic instruments to achieve geopolitical objectives, such as national security, political influence, or strengthening of international standing. Unlike purely economic approaches, which aim for efficiency or growth, geoeconomic tools use economic resources to serve strategic interests and power dynamics on the global stage. Geoeconomics has become central in a multipolar world, where States use economic tools to compete and collaborate while avoiding direct armed conflicts or alliances. In the case of the U.S. and China, the "Trade War" and technological restrictions exemplify the growing relevance of geoeconomic tools in the international landscape.

[2] Geoeconomics and Geopolitics are complementary forms of exercising power. While traditional geopolitics focuses on military strength and territorial control, geoeconomics emphasizes economic and financial influence, crucial for contemporary global competition. States combine these approaches to protect national interests and shape the international order in an increasingly multipolar world.

*_With this inaugural piece, the Observa China 观中国 Geopolitical Analysis Center launches the Trump and His Foreign Policy Toward China - Trump Series segment. Its concise articles will highlight the key agendas of the upcoming Trump administration regarding China.

Our Center addresses Trump's threats against BRICS member countries in the present volume, emphasizing China's position. Future articles will explore topics such as the expected Trade War and the developing dynamics between the U.S., China, and the Middle East, among other subjects likely to shape Trump's agenda toward China._*

This article is part of the project Trump and China Series. This is a project of Center for Geopolitical Analysis - USA and EURASIA.

The opinions expressed in this article do not reflect the institutional position of Observa China 观中国 and are the sole responsibility of the author.