President Trump’s tariffs seem to be backfiring on the US as trade partners realign their strategies. The Shanghai Cooperation Organisation (SCO) Summit in Tianjin, China, saw Prime Minister Modi, President Xi, and President Putin showcasing a potent gesture of unity. The resurgence of the Russia-India-China (RIC) talks could be a major blow to the US dollar’s dominance in global trade.
Will The India-Russia-China Alliance Become The New Global Power?
China and Russia have both actively backed reviving the RIC initiative. India has also been open-minded about the RIC, calling it a “consultative format.”
India, Russia, and China are also core members of the BRICS bloc of nations. The BRICS countries have openly expressed the desire to bring forth the BRICS Pay initiative to facilitate trade in local currencies. The move will significantly reduce the need for US dollars. While India has stated that it has no intention of replacing the US dollar, the recent tariff imposition could change this narrative. An India, Russia, and China alliance could become problematic for Washington, D.C.
India has historically pursued a non-aligned stance when it comes to global power. The US has changed its approach to India since the Clinton administration to bring the countries closer together. However, President Trump’s US-focused policies seem to have delivered a blow to decades of diplomacy.
Also Read: JP Morgan Sees US Dollar Crisis Ahead, Warns Investors to Hedge
There is no denying the fact that the US dollar has lost substantial luster over the last two decades. Additionally, the growing US debt has caused significant worry among global powers and financial institutions. BlackRock CEO Larry Fink also highlighted his concerns over the rising US debt in a letter to shareholders earlier this year.
Despite its falling attraction, the US dollar continues to be the most liquid currency in the world. The dollar also accounts for a majority of global foreign exchange reserves. This aspect of the dollar will be extremely difficult to replace. While the hunt for an alternative currency is on, the US dollar is unlikely to be replaced any time soon.