Trump may be BRICS’s best recruitment agent

The article argues that Trump’s tariffs and financial coercion could accelerate BRICS efforts to reduce—not replace—dependence on the US dollar and Western payments infrastructure. The dollar still represented 57.1% of global FX reserves in Q1 2026, versus only 2% for the renminbi, but BRICS members are expanding local-currency trade, payment-system links and development lending in domestic currencies. Brazil faces a new 25% US tariff on selected exports, while the New Development Bank is targeting 30% of financing in local currencies, potentially rising to 40%-50% in 2027-31.

Analysis

The investable effect is not a near-term reserve-currency break but a slow erosion of high-margin cross-border financial tolls. Visa (V), Mastercard (MA), correspondent banks and dollar-clearing intermediaries face modest long-duration pressure if bilateral settlement and domestic instant-payment rails displace card- and USD-linked flows; this is most material in EM trade corridors, not US consumer payments. Conversely, local payment infrastructure vendors and banks with domestic deposit franchises gain strategic relevance, though most relevant rails are state-owned or unlisted.

For markets, the more immediate transmission channel is a higher geopolitical risk premium embedded in USD funding and Treasury duration rather than outright dollar abandonment. Incremental reserve diversification, local-currency development lending and reduced trade-invoicing demand can raise Treasury term premium over 6-18 months at the margin, particularly if tariff or secondary-sanctions policy broadens to India, Brazil or Gulf states. That is directionally supportive of gold (GLD) and less supportive of long-duration Treasuries (TLT), but the scale remains too small to overcome a recessionary dollar bid or materially weaker global growth.

Consensus likely overstates the probability of a unified alternative financial architecture and understates the commercial damage from fragmentation. India, Saudi Arabia, UAE and Brazil retain powerful incentives to preserve access to US capital markets and dollar liquidity; fragmented bilateral systems also create FX-conversion, liquidity and compliance costs. The thesis is falsified if cross-border dollar settlement volumes and foreign official Treasury holdings remain stable through the next two quarters despite expanded trade restrictions, or if tariff negotiations de-escalate before implementation.

Key Decisions for Investors

• No directional position in DJT: the policy narrative has no clean, attributable earnings transmission to the equity. Treat any tariff or sanctions announcement as an event-risk catalyst rather than a fundamental long/short signal.
• Initiate a small 6-12 month long GLD / short TLT pair only on a confirmed expansion of secondary sanctions or broad tariff implementation affecting India, Brazil or Gulf trade. Target 2:1 upside/downside; exit if 10-year real yields fall materially on recession data, which would dominate the term-premium thesis.
• Underweight V and MA versus domestic payments exposure only as a 12-24 month structural watch, not an immediate short. Escalate to a pair trade if either company identifies sustained cross-border volume deceleration in Brazil, India, UAE or Saudi Arabia while local-rail payment share rises; falsify on resilient cross-border net revenue growth and stable take rates.
• Monitor UUP, US 10-year term premium, Treasury International Capital data, and reported local-currency lending/settlement volumes quarterly. Absent measurable flow changes, avoid positioning for de-dollarization; rhetoric alone is unlikely to overcome the dollar's liquidity advantage.