Trump’s War on the Future, Monetary Edition

Paul Krugman

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Trump’s War on the Future, Monetary Edition<br>Trying to punish Brazil for adopting a better payment system

Paul Krugman<br>Jul 20, 2026

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Brazil introduced Pix, a digital payment system, almost 6 years ago. The system — which allows people to make payments on their phones, not very differently from Apple Pay or Google Pay, except that Pix payments are official currency rather than transfers from private companies — has been highly successful. The vast majority of Brazilians use it regularly, and by all accounts Pix — which is free for individuals, and cheap for businesses — is hugely popular.<br>On Wednesday — as it happens, on the first anniversary of an article I posted praising Pix and suggesting that it may represent the future of money — the Trump administration will try to punish Brazil for this success. It will do so by imposing tariffs on Brazilian exports under Section 301 of the 1974 Trade Act, which permits such tariffs to counter “unfair trade practices.”<br>Why is it unfair for a nation to offer its own citizens a better way to make purchases and pay bills? To some extent the Trump administration is still trying to punish Brazil for being a real democracy. Unlike the United States, Brazil put its former president, Jair Bolsonaro, on trial for trying to foment an insurrection when he lost the last election<br>Trump’s hostility towards Brazil’s Pix system is also an illustration of the same phenomenon we see in his energy policy: this administration is hostile to progress whenever that progress works against the interests and ideology of the oligarchs who have poured money into Trump’s campaigns and his pockets.<br>Pix is essentially a digital version of the real, Brazil’s currency. As a Federal Reserve report from 2022 said, a central bank digital currency — which is what Pix is — “is analogous to a digital form of paper money.” Brazilian banks are required to offer Pix, which the Trumpists claim gives it an unfair advantage over debit cards and other payment methods. But this requirement is similar, at a fundamental level, to the requirement that all U.S. banks accept dollar notes as deposits and disburse dollar notes on demand, which few people would consider unfair.<br>Who is hurt by the advent of Pix? Brazilians’ ability to cheaply make instantaneous payments from their phones certainly hurts the business of Visa and Mastercard, which are both U.S. companies. But since when is it unfair business practice when companies lose business to a competitor that offers a better, cheaper product? For example, should we shut down the U.S. postal service because it offers better and cheaper mail delivery than UPS or FedEx? Should we shut down PayPal and Venmo because they compete with Mastercard and Visa?<br>Beyond concerns about Visa and Mastercard profits, Trump officials are reportedly concerned that Pix and similar payment systems elsewhere might challenge the international dominance of the dollar. In reality, Brazil is too small a player to make much of a dent in the world payments system. The dollar may, however, face a real challenge if the European Central Bank is able, as it hopes, to introduce a digital euro in 2029. If that happens, it’s not hard to imagine that a significant number of transactions that would otherwise have been made in dollars will be made in digital euros instead.<br>But let’s be clear: the reason people might switch to digital euros will be because the US won’t be offering an equally good means of payment. Why won’t there be a digital dollar? Not because it’s a bad idea — as Brazil has shown, it would be a very good idea. But there are powerful special interests that oppose any such move.<br>Last year Republicans in the House passed a bill that didn’t just forbid the creation of a U.S. central bank digital currency; it prohibited any study of the issue by the Federal Reserve. “Don’t even think about parking here creating a digital dollar.”<br>Proponents of this ban claimed to have concerns about how a central bank digital currency would work. But it’s obvious that their real concern is that it would work too well. Crypto interests, in particular, are very worried that consumers who had access to digital dollars would lose interest in stablecoins and other cryptocurrency products, because these products, being risky and awkward to use, would not be competitive with a system that simply lets people make electronic payments in dollars.<br>Brazil’s success is especially galling to crypto promoters because it’s in such stark contrast to the results of another Latin American monetary experiment: El Salvador’s attempt to make Bitcoin a major means of payment. The government of President Nayib Bukele made Bitcoin legal tender and spent large sums trying to promote its use. Yet the effort failed: cryptocurrency never caught on as a means of payment, and the plunge in Bitcoin’s price since last fall has inflicted large...