- BRICS countries are accelerating efforts to move away from the U.S. dollar, raising concerns for U.S. borrowing costs.
- J.P. Morgan warns that this de-dollarization could push up interest rates on U.S. government debt.
- Recent U.S. tariffs on India and Brazil have prompted faster action from BRICS nations to reduce dollar use.
- The Chinese yuan has surpassed the U.S. dollar in China’s overseas trade for the first time in history.
- The U.S. dollar’s share of global currency reserves has fallen from 70% to 58% over the past two decades.
BRICS nations are rapidly reducing their reliance on the U.S. dollar in global trade and finance, according to a recent analysis from J.P. Morgan. The shift is expected to raise U.S. government borrowing costs and weaken the nation’s economic power.
The investment bank says foreign ownership of U.S. government debt has already fallen to about 30%. J.P. Morgan warns that fewer buyers for U.S. Treasury bonds could lead to “significantly higher” interest rates in the future. The bank attributes much of this trend to a coordinated push by BRICS—Brazil, Russia, India, China, and South Africa—to use their local currencies instead of the U.S. dollar.
India and Brazil recently faced U.S. tariffs as high as 50%, which has accelerated their moves away from dollar transactions. India has announced it will stop buying U.S.-made weapons, as reported in the article, and Brazil’s President Lula stated, “I don’t need to remain subordinate to the dollar.” The article clarifies that these steps are strengthening resolve among BRICS members to reduce dependence on the U.S. dollar.
For the first time, over 50% of China’s cross-border trades now use the yuan, up from about half using the dollar in 2020. According to Southeast Asia’s DBS bank, there has been a 30% increase in international settlements in yuan, especially between China and countries in Latin America and the Middle East.
The dollar’s role as the world’s main reserve currency continues to shrink. It now accounts for only 58% of global reserves, down from 70% twenty years ago. J.P. Morgan notes that this decline may weaken the so-called “virtuous dollar cycle,” where strong global demand for U.S. stocks and bonds keeps borrowing costs low for the United States.
BRICS countries now represent about two-thirds of the world’s population and around half of global GDP. J.P. Morgan also cautions that new trade tensions and higher tariffs could further reduce international demand for the U.S. dollar, potentially leading to what the bank calls a “disorderly scenario” for American finances.
The article adds that bond yields have become more unpredictable in 2025, and that policy choices affecting international lending could continue to shape how expensive it is for the U.S. government to borrow in the future.
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