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The 50 per cent tariff on many Brazilian exports to the United States is one of the highest rates that President Donald Trump has imposed as part of his global trade war.
Trump has quite plainly stated that the crippling levy is an attempt to intimidate Brazil’s justice system into halting the criminal prosecution of former Brazilian president Jair Bolsonaro for inciting a failed coup in 2023. To underscore this point, the administration placed sanctions on Alexandre de Moraes, the Brazilian Supreme Court judge overseeing Bolsonaro’s trial.
But Trump’s egregious attack on Brazil’s democratic institutions is aimed not only at bending a sovereign country’s judiciary to his will, but also at beating back a rising challenge to the dollar-denominated financial order.
Shortly after Trump first threatened Brazil with a 50 per cent tariff, the US launched a formal investigation into the country’s “unfair” trade practices, with a focus on digital trade and electronic payment services. This implies that Pix, Brazil’s instant digital payment system, is a threat to Trump’s vision of power.
Pix, developed and operated by Brazil’s central bank, has revolutionised how Brazilians pay bills and transfer money, with at least 76 per cent of the population using the service. As the Nobel laureate economist Paul Krugman recently pointed out, Pix is rapidly displacing both cash and cards, because it offers instantaneous transactions and is free for individuals – and the fees for merchants are much lower than what they pay for traditional payment methods.
The upcoming rollout of the ‘Pix Parcelado’ feature, which will allow users to pay in instalments, could pose an even greater threat to the credit card industry – especially the American giants Visa and Mastercard.
Pix offers far more than convenience: it is a step toward creating a new kind of monetary system, one in which commercial banks as we know them may become obsolete. That’s not the kind of innovation Trump likes, unless it comes from one of his Big Tech allies.
But there is another concern with broader implications: the creeping decline in the dollar’s dominance. After World War II, the greenback became the unrivalled currency of global trade and finance. This “exorbitant privilege” has allowed the US to borrow freely in its own currency, finance wars and innovation, and maintain its geopolitical edge. But that privilege has been eroded in recent decades – in part because of Trump himself.
The normalisation of sanctions played a big role in this shift. What began as a selective practice in the twentieth century intensified after the 9/11 terrorist attacks on the United States, as a counter-terrorism measure.
By the 2010s, economic sanctions had become a cornerstone of US foreign policy. US adversaries such as Iran, Venezuela, and Russia were variously subject to sweeping sanctions, especially during Trump’s first term, with some even being excluded from the Western-dominated SWIFT financial messaging system for international payments.
Following Russia’s invasion of Ukraine in 2022, the US and its European allies froze Russian central bank reserves and expanded secondary sanctions, which accelerated global efforts to find alternatives to the dollar and the US financial system.
Meanwhile, the US fiscal position has taken a perilous turn, with federal debt rising from US$19.8 trillion at the start of Trump’s presidency in 2017 to US$28.1 trillion by January 2021. Under Joe Biden, it climbed past US$36.2 trillion by January 2025 – over 30 per cent of which is held by foreign and international investors. Trump’s One Big Beautiful Bill Act – combining tax cuts for the wealthy, deep reductions in social spending, and deregulation – is expected to add roughly US$3.4 trillion over the next decade, reinforcing already wary foreign creditors’ growing unease about America’s fiscal path.
De-dollarisation has long been the subject of global discussion, as I witnessed firsthand when representing Brazil on the executive boards of the World Bank and the Inter-American Development Bank.
For many years, countries moved cautiously and quietly, because unwinding their greenback positions too quickly would crash the value of dollar-denominated assets and trigger losses in the trillions. But Trump’s indiscriminate attack on free trade and disregard for America’s disastrous fiscal trajectory seem to have changed the calculus.
The first five BRICS members – Brazil, Russia, India, China and South Africa – are now openly discussing BRICS Pay, a decentralised financial messaging system designed to facilitate trade in local currencies. While its implementation remains elusive, momentum is building for cross-border payment infrastructure that bypasses the US financial system and the dollar. The success of Pix, as well as other government-backed payment systems, is a step toward that end.
Whether he understands the technicalities or not, Trump senses this shift. Opening an investigation into Pix is the move of a diminished power that feels under threat and is desperate to maintain control.
Trump and his financial backers see the writing on the wall: if the world no longer needs dollars to trade, then the US will lose its ability to sanction, to dictate, to dominate. But by targeting Pix – and bullying Brazil – Trump risks accelerating the demise of the dollar’s global hegemony.
Rogerio Studart, a Senior Fellow at the Brazilian Center for International Relation, is a former executive director for Brazil at the World Bank and the Inter-American Development Bank.
© Project Syndicate 2025
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