Trump is oblivious to the fact that BRICS is now a bigger economy than the G7. The US is no longer an essential part of the global economy.
Increasing trade outside of the dollar is the only way countries can protect themselves from economic coercion by the US. In particular, China can obviously see that the US will go after them the same way they did with Russia. So, it would be suicide to agree to tie their global trade to the dollar.
Meanwhile, China also happens to be a bigger trade partner than the US for most of the world. So if it comes to choosing between the US and China, it's not really much of a choice. Especially given that China exports things people actually need, while the US barely has any manufacturing industry left accounting for less than 15% of the overall economy. The US is a big market, but it's not essential the way China is.
Basically, I think that China has no choice but to keep dedollarizing. If they don't then it's just going to be worse for them when the US starts stealing their foreign assets, cutting them out of SWIFT, and so on. They have to do it on their terms while they have leverage. Given that China has to dedollarize, they cannot possibly accept Trump's demand to stop trading outside the dollar.
China will say we're happy to keep trading in dollars, but it's our business if we want to use other currencies. At that point the US has to decide whether they start putting 100% tariffs on China and countries trading with China. If they do, then the US economy is likely gonna crash cause prices on everything will shoot through the roof overnight. On top of that, countries will be forced to pick whether trade with China or trade with US is more essential to them.
I think it's likely that Trump is bluffing, and the US walks it back when China says no, but you never know. I do think that the economic war with Russia gives us some idea of what to expect. The US pulled the trigger on trying to cut Russia out, and we see that major countries like China and India did not fall in line. At that point the whole scheme collapsed. Trying to cut China out of world trade is even more absurd in my opinion, and putting 100% tariff would be tantamount to that.