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  • After the US presidential election, Trump pledges to lift all sanctions against Russia and Iran
  • D. Trump is convinced that the sanctions are to blame for the weakening of the dollar
  • The dollar is going through tough times while the BRICS continue to try to build a new order
References
Donald Trump
D. Trump is not supporting sanctions. ELTA

After the US presidential election, Trump pledges to lift all sanctions against Russia and Iran

Donald Trump acknowledges that US sanctions are hurting the dollar. In one of his latest statements, the former US President stressed that he would lift all sanctions against Russia and Iran if he wins the elections in November.

Over the last few years, the dollar has obviously weakened, and countries desire to stop pegging their transactions to this currency[1]. This has been particularly influenced by the BRICS, a group of the world's largest countries made up of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates.

Since 2022, when the West started imposing increasingly harsh sanctions on Russia, this has encouraged Moscow to seek the widest possible trade in local currencies. As the economic alliance aims to introduce its own payment system, Trump's promise to lift sanctions would be an exciting development that could significantly change current trends[2].

D. Trump wants to pull off sanctions. ELTA
D. Trump wants to pull off sanctions. ELTA

D. Trump is convinced that the sanctions are to blame for the weakening of the dollar

Over the past few years, the BRICS bloc has moved firmly towards reducing the dollar's influence. While the US dollar is still considered the main currency in terms of global reserves, its position in the global financial sector is indeed under threat. According to the Atlantic Council's dollar dominance gauge, the dollar's share as a global asset reserve fell to 58% in 2024.

To explain the dollar's weakening trend, Trump has blamed the ongoing unrest and sanctions. Referring to sanctions, Trump said that they ultimately "kill your dollar and kill everything your dollar stands for". He also stressed the need to ensure the status of the dollar:

"I think it's important that [the dollar] remains the international reserve currency."

The former US President also added that the loss of the dollar's dominance in the world would be equivalent to losing a war:

"The dollar must remain the international reserve currency. Failure to do so would be the same as losing a war. We will become a third-world country. We cannot let that happen."

However, he stressed that sanctions are necessary "for countries that deserve it". After all, Trump himself imposed sanctions on Iran and North Korea when he was still US President. However, with Russia, he delayed for some time, and now he is saying that sanctions cannot be long-lasting if they weaken US dominance too much. Instead of focusing on the importance of sanctions, Trump has stressed the importance of preventing countries such as Russia, Iran, and China from ceasing to use the dollar as the main global reserve currency[3].

The dollar is getting less valuable. Alexander Grey/Unsplash
The dollar is getting less valuable. Alexander Grey/Unsplash

The dollar is going through tough times while the BRICS continue to try to build a new order

The US dollar has been the international reserve currency since the Bretton Woods system emerged after World War II. The agreements stipulated that the dollar would be the main and only currency, freely convertible into gold, against which all other currencies would float. This system was established in 1944 but ended in 1971 when US President Richard Nixon ended the fixed relationship between gold and the US dollar[4].

However, despite the termination of the agreement, the US still remained the main currency because the Americans managed to maintain their dominance. The colorful US Secretary of State Henry Kissinger and his geopolitical prowess in creating the so-called 'petrodollar' are strongly linked to this. After all, back in 1975, the US succeeded in getting Saudi Arabia to sell its oil only in dollars, and soon afterward, the same thing happened with all the OPEC countries. Since oil is the engine of industrialized economies and globalization, the dollar has remained the currency of international reserves. However, the situation is slowly changing, and experts see the dollar's power diminishing.

The former US President is well aware that some parts of the world are trying to abandon the long-standing Western monetary system. The BRICS are even quite open about making such a move a priority. In October, the BRICS summit in Kazan is expected to be full of tough messages about weakening the US currency.

Seeing the worsening situation, Trump commented:

"You lose Iran, you lose Russia. China is trying to make its currency the dominant currency. You are losing the dominance of the dollar. There are so many conflicts going on with countries that eventually you will lose dollar dominance."

Experienced investors also seem to believe that the winner of the US presidential elections in November could directly impact the currency's fate. For example, the head of global fixed income at Neuberger Berman said that Trump's proposed policies, including tariffs, tax cuts, and the removal of sanctions, could indeed help strengthen the dollar.