During President Trump’s election campaign, discussions centered around the economic policies of his future presidency within the United States. However, following his victory, elements of international economic policy began to emerge, particularly regarding tariffs in export-import relations (with Mexico, Canada, China, and the BRICS countries), the international monetary system, and the institutions that form its foundation. At its core, this policy aimed to strengthen the international role of the US dollar as a key tool in the pursuit of making “America great again.”

President Trump’s approach to countering the BRICS alliance and its ambition to establish a common currency to challenge the US dollar relies heavily on economic and diplomatic measures, emphasizing the use of economic diplomacy. In the 21st century, "Smart Power" is no longer solely about maximizing military strength or maintaining global hegemony. Instead, it focuses on constructing a political-economic management system that integrates resources, interests, and benefits into a successful cooperation strategy. This principle underpins the strength of economic diplomacy as a vital aspect of a nation’s foreign policy. Economic diplomacy represents strategic decisions that align and harmonize a country’s internal development interests with the external factors of the international market.

From this perspective, reassessing and bolstering the role of the US dollar as a global reserve currency and international means of payment emerges as a central objective of Trump’s international economic policy. A country’s currency reflects its economic and political strength, and Trump underscored this during his electoral campaign, stating, “Preserving the status of the US dollar as a world reserve currency and international means of payment is critical for American power.” Consequently, his administration is expected to prioritize policies that reinforce the dollar's dominance in global trade and finance, including the potential imposition of sanctions against efforts to promote de-dollarization.

According to him, this is achieved by deepening the following economic and political elements:

Increasing confidence in the US economy. Trump aims to create a stable and globally competitive economy through fiscal and monetary policies that boost confidence in the dollar. This includes reducing federal debt and promoting domestic investment, making the US a preferred destination for foreign investors, particularly from Europe. If protectionist policies succeed in reviving American industry and spurring economic growth, they could further enhance global confidence in the dollar. Trump has also proposed intensifying bilateral trade agreements with countries that use the dollar, offering these nations preferential access to US markets and technology.

Avoiding de-dollarization. In response to the BRICS countries' efforts to establish a common currency and shift to alternatives like trading in national currencies, Trump plans to fortify trade alliances with nations that support the use of the dollar. This strategy may include new trade initiatives and incentives for international partners that rely on the dollar for their transactions.

Reforming the monetary mechanisms of international systems. Trump is expected to back technologies that preserve the dollar's advantages in global monetary markets while countering digital platforms promoted by the BRICS, such as mBridge. His administration might focus on advancing US influence in blockchain technology to challenge similar innovations by China. Additionally, diplomatic pressure could be applied to encourage countries to continue using systems like SWIFT, which are tied to the dollar. This effort is closely linked to international financial institutions and banks, for which Trump promises fiscal relief.

Protecting American companies from foreign competition. Another key campaign promise is to safeguard US companies by implementing protectionist measures against countries that promote alternatives to the dollar. This could include sanctions, trade barriers, and support for increased exports of strategic resources like energy and advanced technology to strengthen the American economy.

Improving strategic reserves and technological support for allied countries. To compete with the BRICS' gold reserves, Trump has proposed bolstering US strategic reserves, including gold and other essential raw materials. He also aims to promote US digital technologies, such as digital banking, to ensure American leadership in global financial innovation.

Using US-backed technological platforms in finance and trade. Trump has emphasized the importance of developing a US-supported international financial platform to rival the BRICS' digital initiatives. One possibility is the creation of an advanced digital system for international transactions, built on secure, US-backed technology. This system would allow transactions to be closed and controlled by the participating entities, ensuring American leadership in global trade and finance.

These strategies reflect a combination of direct economic measures, strategic diplomacy, and potential geopolitical interventions aimed at preserving the dollar’s dominance in global trade. However, success hinges on numerous unpredictable factors inherent in the ever-changing dynamics of the global market. One thing is certain: Trump’s monetary policies are evident throughout his economic programs. His administration appears highly attuned to the complexities of economic and geopolitical dynamics.

In his previous term, President Trump relied on dialogue and diplomacy rather than wars or economic-military upheavals. Now, it seems he has incorporated specific measures in his economic agenda to address the challenges posed by BRICS. Politically, these measures can be summarized as follows:

Dialogue and diplomacy. Trump has demonstrated a willingness to engage with BRICS leaders, such as Vladimir Putin and Xi Jinping, to ease tensions and ensure their economies do not completely abandon the use of the dollar. He may also consider using economic incentives or lifting certain sanctions to encourage wider adoption of the US dollar in international trade. Such diplomacy would aim to dilute the unity and resolve of the BRICS bloc.

Promoting internal divisions within BRICS. Analysts suggest that Trump could exploit divisions between BRICS members, such as the rivalry between China and India or Brazil’s alignment with Western interests. Weakening the internal cohesion of the BRICS alliance could undermine its collective efforts to establish a new monetary framework.

Forging new strategic partnerships. A cornerstone of the Trump administration’s international economic policy involves creating strategic alliances in Asia and Latin America. This strategy seeks to counter China’s growing influence in these regions by establishing robust economic and trade partnerships that align with US interests.

Strengthening cooperation between the euro and the dollar. The Trump administration has emphasized the importance of collaboration between the European Central Bank (ECB) and the Federal Reserve (Fed) to ensure global financial stability. Such cooperation is critical to counteracting potential BRICS strategies aimed at weakening the dollar’s dominance. Additionally, bolstering traditional reserves, such as government bonds and gold, remains a key focus for maintaining stability in international financial systems and foreign exchange markets, particularly concerning the dollar and the euro.

Potential Negative Effects:

Erosion of confidence in the dollar system: Protectionist policies, such as high trade tariffs or import restrictions, could prompt trading partners to move away from the dollar-based system. This may occur if these partners perceive the dollar as less stable or view the US as less committed to free global trade.

Acceleration of alternative systems: Countries, particularly those in the BRICS alliance, may hasten the development and adoption of alternative currencies or digital payment systems like mBridge. These efforts would be aimed at bypassing US policies on sanctions and payment systems, further weakening the dollar’s role in international trade.

Escalation of trade conflicts: Protectionist measures could intensify trade tensions, even with nations that import US technology or capital. Such conflicts might push countries to adopt alternative trade and financing methods, including the use of local currencies, to reduce reliance on the dollar.

Impact on the dollar’s global role: The balance between the domestic economic benefits of protectionist policies and their external geopolitical consequences is critical. While a stronger US economy might reinforce the dollar’s position, economic isolation and rising trade tensions could erode international confidence. This, in turn, could bolster de-dollarization efforts by actors like the BRICS alliance.

Potential Positive Effects:

Reduction of the US trade deficit: Protectionist policies could lower the trade deficit, particularly with China, by decreasing import dependence and bolstering domestic production. This, in turn, could help sustain the strength of the dollar, especially when paired with a stable monetary policy.

Increased exports: A focus on exporting strategic products, such as energy, could play a significant role in maintaining the dollar’s dominance in global trade.

Overall, the focus of Trump’s second term is expected to include restructuring international institutions to enhance US influence. While Donald Trump has not presented detailed proposals for reforming organizations like the IMF, World Bank, or WTO in his 2024 campaign, his prior actions and rhetoric suggest an emphasis on aligning these institutions more closely with US interests.

Based on electoral discussions, early statements from his leadership team, and the profile of his associates, it can be inferred that American economic policy under Trump will prioritize stimulating domestic business. This strategy would emphasize technological development, employing tools such as customs regulations, tax incentives, and monetary policies to promote robust domestic economic growth. / Panorama

*Prof Dr Anastas Angjeli is an economy expert, academician, former Finance Minister and MP, founder and president of the Mediterranean University of Albania