Donald Trump, the US President designate has fired the first salvo on BRICS clearly signaling that BRICS has arrived on the international stage.
In a post on Truth Social, Trump’s own social media offering, he said, ““The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. 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 U.S. Dollar or, they will face 100% Tariffs and should expect to say goodbye to selling into the wonderful U.S. Economy. They can go find another ‘sucker!’ There is no chance that the BRICS will replace the US Dollar in International Trade, and any Country that tries should wave goodbye to America.”
Whether the statement has come out of arrogance or fear, acceptance even, is up for debate. However, the statement is a sure sign of the issue being on the minds of US and other western governments. And so it should be, considering that they are the ones who have pushed multiple countries into a corner with their policies and at times high-handedness.
Founded in 2009 as BRIC i.e. Brazil, Russia, India and China and expanding to BRICS in 2010 with South Africa joining, the grouping was essentially meant to promote peace, security, development and cooperation within the member nations. In 2024, the group expanded further with 4 more countries joining BRICS i.e. Ethiopia, UAE, Iran and Egypt. Another country i.e. Saudi Arabia has also been approved for joining by the member nations but is yet to confirm their acceptance. Another 13 countries, namely Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan and Vietnam have also been invited to be partner countries. There are many others who have either applied for membership or have been invited to join as partner countries.
Consider this, after the addition of new members the GDP of the group represent 37% of the Global GDP, 45% of the global population and potentially 40-45% of global oil production/reserves, if Saudi Arabia was to join. The good part is that the bloc by itself has a large consumer base too signalling a sustainable isolated future; not that it is desirable. Add partner countries, the global south and the countries generally sick of the hegemony of the west, there is enough reasons for the world to ditch the US and its “mighty US dollar”.
I am no expert on global economy, but don’t think I need to be one to decide that if a nation imposes tariff on another, the supplier nation is not going to pay the tariff from his margin or pockets. The tariff will be absorbed in the selling price. So, in essence what the tariffs will do is only raise the cost of the product for the importing country’s population. It works if the alternates are available, then you can squeeze the other country to submission, but if you don’t it is a foolhardy exercise. Just like imposing sanctions on Russia.
The G7 countries have had a tough 2024 with their economies struggling due to multiple factors. The manufacturing is in doldrums. Even if they were to raise the production, who will consume it. The dwindling population is not helping their cause in any case. US itself has a huge debt to take care of. Elon Musk and many others have repeatedly stated that US is going bankrupt/broke, what with the USD 36T debt. In this context, it seems apparent that US needs the world more than the world needs it.
This is not to say that US will just watch as the world de-dollarizes. It will do everything in its capacity to hold on to the might that it wielded. It will do everything to keep the reserve currency tag for the US dollar. The forever wars were a basic need to maintain that status of economic and military might. I have no doubt US will even go to war to preserve their status in the world.
Trump is a businessman and US is nobody’s friend. It is likely that they will go ahead with executing the threat. A war is imminent, whether it is a trade war or a military one, only time will tell.
