Introduction
SAN PAOLO – The 50% tariff imposed by US President Donald Trump on numerous Brazilian exports is among the highest rates he has enforced as part of his global trade war. Trump has explicitly stated that this oppressive tariff aims to intimidate Brazil’s judicial system into halting the criminal proceedings against former President Jair Bolsonaro for attempting a failed coup in 2023. To emphasize this point, the government imposed sanctions on Alexandre de Moraes, the Supreme Court judge presiding over Bolsonaro’s trial.
Beyond Judicial Intimidation: Countering Financial Challenges
However, Trump’s blatant assault on Brazil’s democratic institutions does not stop at attempting to subdue a sovereign nation’s judicial will. It also seeks to counteract a growing challenge to the US-led financial order.
Shortly after Trump first threatened Brazil with a 50% tariff, the US initiated a formal investigation into Brazil’s alleged “unfair” trade practices, focusing on digital commerce and electronic payment services. This investigation targets Pix, Brazil’s groundbreaking digital payments system, which poses a significant threat to Trump’s vision of financial dominance.
Pix: A Game-Changer in Digital Payments
Developed and operated by Brazil’s central bank, Pix has revolutionized how Brazilians pay bills and transfer money—at least 76% of the population uses the service. As noted by Nobel laureate Paul Krugman, Pix is rapidly displacing both cash and traditional cards due to its instant transactions and free-of-charge nature for individuals (with significantly lower merchant fees compared to conventional payment methods).
The upcoming launch of “Pix Parcelado,” allowing users to pay in installments, could further threaten the credit card industry—especially US giants Visa and Mastercard. Pix offers more than convenience; it signifies a step towards creating an entirely new monetary system where commercial banks as we know them could become obsolete.
The Gradual Decline of Dollar Dominance
Beyond Pix, there’s another concern with broader implications: the progressive decline of the dollar’s dominance. Post-World War II, the greenback became the unrivaled currency in global trade and finance. This “exorbitant privilege” allowed the US to borrow freely in its currency, fund wars and innovation, and maintain its geopolitical edge.
However, this privilege has been eroding over the past few decades—partly due to Trump’s actions. Normalization of sanctions played a significant role in this shift. What began as selective practice in the 20th century intensified post-9/11 as an anti-terrorism measure. By the 2010s, economic sanctions became a cornerstone of US foreign policy. Adversaries like Iran, Venezuela, and Russia faced various radical sanctions (especially during Trump’s first term), with some even excluded from the Western-dominated SWIFT system for international payments.
Following Russia’s 2022 invasion of Ukraine, the US and its European allies froze Russia’s central bank reserves and expanded secondary sanctions, accelerating global efforts to find alternatives to the dollar and US financial system.
US Fiscal Situation: A Dangerous Turn
Meanwhile, the US fiscal situation has taken a dangerous turn, with federal debt rising from $19.8 trillion at the start of Trump’s presidency in 2017 to $28.1 trillion in January 2021, and over $36.2 trillion under Joe Biden in January 2025—with more than 30% held by foreign investors.
Trump’s tax-cut proposal for the wealthy, deep social spending reductions, and deregulation are expected to add approximately $3.4 trillion to the deficit over the next decade, further fueling foreign creditors’ growing dissatisfaction with the US fiscal trajectory.
Global Desollarization: A Growing Reality
Desolarization has long been a subject of global debate. During my tenure representing Brazil in the executive boards of the World Bank and Inter-American Development Bank, I witnessed countries cautiously moving away from dollar positions to avoid rapid devaluation of dollar-denominated assets and resulting trillion-dollar losses.
Trump’s indiscriminate attacks on free trade and his disregard for the US’s fiscal mismanagement seem to have altered this calculus.
BRICS Pay: A Decentralized Financial Messaging System
The five BRICS members—Brazil, Russia, India, China, and South Africa—now openly discuss BRICS Pay, a decentralized financial messaging system designed to facilitate local currency trade. Although its implementation remains challenging, it’s gaining momentum with cross-border payment infrastructure bypassing the US financial system and the dollar.
Pix’s success, along with other government-backed payment systems, is a step towards this goal.
Key Questions and Answers
- What is Pix? Pix is a digital payments system developed by Brazil’s central bank, significantly impacting how Brazilians pay bills and transfer money.
- Why is Trump targeting Pix? Trump perceives the growing threat to US financial dominance and seeks to maintain control by attacking Pix and intimidating Brazil.
- What is the significance of BRICS Pay? BRICS Pay is a decentralized financial messaging system designed to facilitate local currency trade, potentially reducing reliance on the US dollar.
- How has Trump’s fiscal policy affected the US dollar’s dominance? Trump’s tax cuts for the wealthy, deep social spending reductions, and deregulation have added to the US deficit, fueling foreign creditors’ dissatisfaction and contributing to the erosion of the dollar’s dominance.
