The return of Donald Trump to the White House has intensified tensions between the United States and BRICS nations. He believes the bloc, led by “aggressors” Russia and China, wants to play a hand in undermining what the US has built on the international trade front.
Since he was declared victor in the November presidential elections, Trump has been singing only one tune: not on his watch. The incoming POTUS is rallying troops to protect the US dollar against anything BRICS nations want to come up with to reduce international trade reliance on the dollar.
Last year, Trump made his position clear in a bold statement, declaring, “BRICS countries moving away from the dollar while we stand by and watch is OVER.” The president-elect has made it abundantly clear: any country that attempts to replace the dollar should wave bye-bye to doing any business with the US.
Trump: Tariff is my favorite word in the dictionary
“We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US Dollar, or they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful US Economy, ” said the 47th US President, via his social media platform Truth Social.
Trump’s message is unambiguous: no country will be allowed to undermine the dollar without severe consequences. “They can go find another ‘sucker.’ There is no chance that the BRICS will replace the US Dollar in international trade.”
His return to the presidency is making the BRICS alliance think twice about any decisions it wants to push forward with.
The bloc of nations, which has been exploring alternatives to the dollar for over a decade, was already having a tough time moving forward with the less “mindful” Joe Biden in the Oval office. With Trump, it is going to get more tougher.
The Tariffs, and Tariffs alone, created this vast wealth for our Country. Then we switched over to Income Tax. We were never so wealthy as during this period. Tariffs will pay off our debt and, MAKE AMERICA WEALTHY AGAIN! https://t.co/ZuAi9qCdai
— Donald J. Trump (@realDonaldTrump) January 3, 2025
During his first term, Chinese State Councilor Yang Jiechi remarked that Western governance models and concepts are struggling to adapt to the evolving international landscape. He argued that Western-led global governance has reached a point that is “beyond redemption.”
Is this true? Well, market data performances suggest otherwise. The US economy is looking more likely to peak during Trump’s second tenure. But how are BRICS nations doing so far? Are they recording highs? Not quite.
China
In 2024, China’s GDP growth was forecasted to be 5%, but on closer inspection, the true economic performance appeared weaker. Analysts estimate that China’s GDP growth will only improve modestly to around 2.4% to 2.8%, far below the official figures.
The country’s real estate sector, which had previously been a significant driver of economic growth, has been on the downtick. This has made local government investment and consumption fall, as a result.
China’s government has made attempts to stimulate the economy by cutting interest rates and introducing massive refinancing programs, but these measures have not been enough to offset the economic slowdown.
Moreover, inflation-adjusted GDP growth, which has been hovering near negative levels, further complicates the nation’s economic outlook.
Russia
Russia, another key BRICS member, has seen a dramatic shift in its trading patterns in recent years. With the ongoing geopolitical tensions and sanctions, Russia’s trade with Western nations has decreased significantly.
According to IMF data, Russia’s exports to advanced economies, which traditionally paid in convertible currencies, had fallen to about 10% of the total by late 2024, down from over 50% in early 2022. In dollar terms, this decline represents a loss of nearly $240 billion in revenue.
Meanwhile, Russia’s trade with non-convertible currencies, such as the Chinese renminbi and Indian rupees, has surged. However, while trade with China and India has increased, these transactions are no longer conducted in dollars.
Reports indicate that a substantial portion of Russia’s trade with India is conducted in rubles or rupees. Shunning the US currency has led the ruble itself to depreciate by over 20% against the dollar in the past year. Not such a good idea, is it?
Brazil
Days before Donald Trump assumes presidential duties, the Brazilian economy is expected to slow down due to persistent fiscal concerns. Analysts predict that Brazil’s GDP growth will be limited to just 2.3% in 2024, marking the weakest annual growth since the pandemic.
The Brazilian government’s piecemeal approach to fiscal tightening has failed to reassure investors, leading to concerns about the country’s growing debt burden. Furthermore, the Brazilian real, which has already depreciated significantly against the US dollar, is expected to face further drops in the coming months.
Eduardo Saboia, the diplomat leading the upcoming BRICS summit in Rio de Janeiro this July, dismissed recent threats from President-elect Trump to impose 100 percent tariffs on BRICS nations if they undermine the dollar.
In a recent interview, Saboia clarified that there is no intention to replace the dollar but rather to encourage the use of local currencies in trade.
“We want to increase trade between us, increase investments and reduce transaction costs. There is a discussion about the use of local currencies in transactions, but not in an impositional way,” he said.
He also emphasized that BRICS nations are not anti-Western. “BRICS members are not anti-something, anti-West. On the contrary, after the 2008 crisis, the large developed economies sought the collaboration of BRICS countries in the effort to relaunch the world economy…BRICS countries come to build, they do not come to worsen things.”
India
Much like Brazil, the Indian government has lowered its GDP growth forecast for the fiscal year, predicting a growth rate of just 6.4%, the weakest since the pandemic. Consumer spending has decreased, and inflation has soared, further weighing on the country’s economic outlook.
Analysts anticipate that India’s economy will continue to face challenges in the coming months, as rising geopolitical tensions and Trump’s proposed tariffs are expected to dampen global trade and investment.
The pressure has led to growing calls for the new central bank governor, Sanjay Malhotra, to cut interest rates and abandon the restrictive policies maintained by his predecessor, Shaktikanta Das.
Under Das, the Reserve Bank of India held rates steady for nearly two years despite increasing demands for monetary easing, even from within the government. Malhotra is confident the economy will recover in the near future, buoyed by strong consumer and business confidence.
The BRICS alliance is at a crossroads
China, Russia, Brazil, and India are seeking ways to reduce their reliance on the US dollar, albeit indirectly. However, each member country is currently grappling with its own domestic issues.
China is in an economic slowdown, Russia is physically battling with Ukraine, Brazil is in a state of market uncertainty, and India is looking at decelerating growth. The future of the BRICS bloc, in the hands of the fiery Donald Trump, remains uncertain.
The incoming Republican US administration’s policies and the potential escalation of trade wars is a tipping point that may leave the bloc with more to lose than gain. Speaking to Bloomberg, International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned that the threat of tariffs is already pushing up long-term borrowing costs globally.
Trump does not barge on international policies, and since BRICS economies are still finding their feet, he will likely derail most of their plans, if not all.
Can BRICS survive the challenges posed by POTUS Trump’s trade policies? Will it be forced to concede to US economic dominance? Only time will tell, but the stakes for global trade and finance have never been higher.
This articles is written by : Fady Askharoun Samy Askharoun
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