BRICS vs US Tariffs

[fusion_builder_container type="flex" hundred_percent="no" hundred_percent_height="no" hundred_percent_height_scroll="no" align_content="stretch" flex_align_items="flex-start" flex_justify_content="flex-start" flex_wrap="wrap" hundred_percent_height_center_content="yes" equal_height_columns="no" container_tag="div" hide_on_mobile="small-visibility,medium-visibility,large-visibility" status="published" spacing_medium="" spacing_small="" padding_dimensions_medium="" padding_dimensions_small="" border_sizes="" border_style="solid" box_shadow="no" box_shadow_blur="0" box_shadow_spread="0" gradient_start_color="" gradient_end_color="" gradient_start_position="0" gradient_end_position="100" gradient_type="linear" radial_direction="center center" linear_angle="180" background_position="center center" background_repeat="no-repeat" background_custom_size="" background_custom_size_medium="" background_custom_size_small="" fade="no" background_parallax="none" enable_mobile="no" parallax_speed="0.3" background_blend_mode="none" background_slider_position="" background_slider_skip_lazy_loading="no" background_slider_loop="yes" background_slider_pause_on_hover="no" background_slider_slideshow_speed="5000" background_slider_animation="fade" background_slider_direction="up" background_slider_animation_speed="800" video_aspect_ratio="16:9" video_loop="yes" video_mute="yes" pattern_bg="none" pattern_custom_bg="" pattern_bg_color="" pattern_bg_style="default" pattern_bg_opacity="100" pattern_bg_size="" pattern_bg_blend_mode="normal" mask_bg="none" mask_custom_bg="" mask_bg_color="" mask_bg_accent_color="" mask_bg_style="default" mask_bg_opacity="100" mask_bg_transform="left" mask_bg_blend_mode="normal" render_logics="" logics="" absolute="off" absolute_devices="small,medium,large" sticky="off" sticky_devices="small-visibility,medium-visibility,large-visibility" sticky_transition_offset="0" scroll_offset="0" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" filter_hue="0" filter_saturation="100" filter_brightness="100" filter_contrast="100" filter_invert="0" filter_sepia="0" filter_opacity="100" filter_blur="0" filter_hue_hover="0" filter_saturation_hover="100" filter_brightness_hover="100" filter_contrast_hover="100" filter_invert_hover="0" filter_sepia_hover="0" filter_opacity_hover="100" filter_blur_hover="0" padding_right="0px" padding_left="0px" padding_bottom="0px" margin_bottom="0px"][fusion_builder_row][fusion_builder_column type="1_1" align_self="auto" content_layout="column" align_content="flex-start" valign_content="flex-start" content_wrap="wrap" center_content="no" column_tag="div" target="_self" hide_on_mobile="small-visibility,medium-visibility,large-visibility" sticky_display="normal,sticky" type_medium="" type_small="" type="1_1" flex_grow_medium="" flex_grow_small="" flex_grow="" flex_shrink_medium="" flex_shrink_small="" flex_shrink="" order_medium="0" order_small="0" dimension_spacing_medium="" dimension_spacing_small="" dimension_spacing="" dimension_margin_medium="" dimension_margin_small="" dimension_margin="" padding_medium="" padding_small="" padding="" hover_type="none" border_sizes="" border_style="solid" border_radius="" box_shadow="no" dimension_box_shadow="" box_shadow_blur="0" box_shadow_spread="0" background_type="single" gradient_start_color="" gradient_end_color="" gradient_start_position="0" gradient_end_position="100" gradient_type="linear" radial_direction="center center" linear_angle="180" lazy_load="avada" background_position="left top" background_repeat="no-repeat" background_custom_size="" background_custom_size_medium="" background_custom_size_small="" background_blend_mode="none" background_slider_position="" background_slider_skip_lazy_loading="no" background_slider_loop="yes" background_slider_pause_on_hover="no" background_slider_slideshow_speed="5000" background_slider_animation="fade" background_slider_direction="up" background_slider_animation_speed="800" render_logics="" sticky="off" sticky_devices="small-visibility,medium-visibility,large-visibility" absolute="off" absolute_props="" filter_type="regular" filter_hover_element="self" filter_hue="0" filter_saturation="100" filter_brightness="100" filter_contrast="100" filter_invert="0" filter_sepia="0" filter_opacity="100" filter_blur="0" filter_hue_hover="0" filter_saturation_hover="100" filter_brightness_hover="100" filter_contrast_hover="100" filter_invert_hover="0" filter_sepia_hover="0" filter_opacity_hover="100" filter_blur_hover="0" transform_type="regular" transform_hover_element="self" transform_scale_x="1" transform_scale_y="1" transform_translate_x="0" transform_translate_y="0" transform_rotate="0" transform_skew_x="0" transform_skew_y="0" transform_scale_x_hover="1" transform_scale_y_hover="1" transform_translate_x_hover="0" transform_translate_y_hover="0" transform_rotate_hover="0" transform_skew_x_hover="0" transform_skew_y_hover="0" transform_origin="" transition_duration="300" transition_easing="ease" transition_custom_easing="" motion_effects="" scroll_motion_devices="small-visibility,medium-visibility,large-visibility" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" min_height="" last="no" link="" border_position="all"][fusion_text columns="" rule_size="" animation_direction="left" animation_color="" animation_speed="0.3" animation_delay="0" logics="" hide_on_mobile="small-visibility,medium-visibility,large-visibility" sticky_display="normal,sticky"]

The BRICS alliance has undergone dramatic expansion in 2024-2025, growing from five founding members to eleven full members while adding ten partner countries. This expansion coincides with former President Donald Trump's renewed threats of tariffs against BRICS nations, including a 100% tariff on countries that challenge the U.S. dollar's dominance and an additional 10% tariff on nations supporting "anti-American policies". The intersection of these developments signals a fundamental shift toward a multipolar global economic order, with profound implications for international trade, financial systems, and geopolitical power dynamics.

The Geopolitical and Economic Motivations Behind BRICS Expansion

BRICS expansion represents a deliberate challenge to Western-dominated international institutions. The bloc now includes eleven full members and ten partner countries. This expansion brings the coalition to represent 45% of the global population, 35% of the world GDP (in constant prices or PPP), and 25% of the global trade. The motivations for such an expansion are quite clear and can be summarized in the following points: institutional reform and representation, economic sovereignty and de-dollarization, resource control and market access and financial infrastructure development.

Let’s look into them more thoroughly. BRICS countries share an explicit ambition to diminish Western dominance in global governance and strengthen the Global South's voice. The bloc seeks to reform existing institutions like the UN Security Council, World Bank, and IMF while creating alternative frameworks. Therefore, a common policy inclination is essential. Then, a primary driver is reducing dependence on the U.S. dollar-dominated financial system. Russian Foreign Minister Sergey Lavrov revealed that 67% of intra-BRICS transactions are now conducted in local currencies, with the dollar's share falling to just 33%. This represents a historic shift in global monetary arrangements. Focusing on resources it is crucial that the expanded BRICS controls significant global resources, including 30% of oil production and 42% of wheat, 52% of rice, and 46% of soybean production. This resource concentration provides leverage in global commodity markets and food security negotiations. Finally, we should not neglect the New Development Bank (NDB) and the payment systems the BRICS are developing. NDB has approved $39 billion in loans for infrastructure and sustainable development projects, focusing on renewable energy, transportation, and digital infrastructure. While smaller than the World Bank's $1 trillion portfolio, the NDB represents a viable alternative funding source and this also aligns with the institutional reforming initiatives. Simultaneously, BRICS Bridge digital payment platform and BRICS Pay system are designed to facilitate cross-border transactions without relying on SWIFT or dollar-denominated systems. These initiatives aim to create a decentralized financial ecosystem insulated from Western sanctions.

The Potential Effectiveness and Consequences of Trump's Proposed Tariffs

Analysis by the Peterson Institute for International Economics suggests that a 100% tariff on BRICS countries would cause lower GDP and higher inflation for all parties involved. For the United States, GDP would be $432 billion lower by the end of Trump's term, with the price level 1.6% higher. China would experience the worst GDP impact due to its significant trade exposure to the U.S. market. But ultimately, President Trump’s target would not play out for they main reasons. First, this policy will accelerate de-dollarization. Rather than deterring BRICS cooperation, tariff threats may accelerate the very trends they aim to prevent. Countries facing economic coercion are more likely to seek alternatives to dollar-based systems. Second, it will strengthen the coalition. Trump's threats have unified BRICS members in their criticism of "unilateral tariff and non-tariff measures" that "distort global trade". Brazilian President Lula da Silva's response that "the world does not want an emperor" reflects growing resistance to U.S. economic pressure. Third, there is limited enforcement capacity, since many BRICS countries, including India and Brazil, maintain significant trade relationships with the U.S. that create mutual dependencies. This interconnected nature of global supply chains limits the effectiveness of broad tariff policies.

U.S. Influence in Global Economic Institutions and Trade Relationship

At this point someone should really ring the danger bell in the White House! Multiple indicators suggest the U.S. is losing its grip on global economic leadership. First, the Dollar’s hegemony is on the verge of extinction, as there is a more than 70% more decline in US Dollar global foreign exchange reserves since 1999. Then, the U.S. faces increasing pushback in multilateral institutions. Russia and China regularly veto U.S. proposals in the UN Security Council, while the Global South seeks greater autonomy in international decision-making. Finally, and most importantly, there is a huge shift in trade patterns. Intra-BRICS trade is growing faster than BRICS-G7 trade, with projections showing intra-BRICS trade exceeding $500 billion by 2026. This represents a fundamental realignment of global trade flows away from Western-dominated networks. The holding power now really seems to be the European Union. A Union’s shift to China, a policy that Greece’s ex Minister of Finance, Professor Yanis Varoufakis has suggested many times in the recent past, would really mean the end of the US Dollar era.

Now, looking a bit inside the States, there are three very difficult situations that are developing. The first is the decline of “soft power”. Recent polling data reveals a dramatic decline in U.S. global standing. The 2025 Democracy Perception Index shows 55% of surveyed states now hold negative views of the United States, while 76 out of 96 countries maintain net favorable perceptions of China. Among traditional allies, positive U.S. perceptions have plummeted, with Canada experiencing the largest drop from 52% to 19%. But, there is also a huge domestic polarization, since internal political divisions in the U.S. undermine its ability to project unified global leadership.

Businesses, Investors and Governments Interpretation of This Global Power Shif

Regarding investment strategies, the picture is clear and very disheartening: The net exposure to BRICS-linked ETFs and the increasing allocation to BRICS-linked assets, except for the emerging market focus also suggests that the US or Europe is not a place for traditional and alternative investments anymore! Someone would argue that this could be also because BRICS offer some of the best yields in the market, but we should really focus on the sectors that invest in BRICS. These include renewable energy, infrastructure, and technology companies, which either way offer higher yield than other sectors. Furthermore, companies are restructuring supply chains to reduce dependence on single markets, with particular focus on renewable energy, manufacturing, and e-commerce sectors within BRICS countries, which signals a major supply chain diversification.

Finally, governments respond to this shifting environment by a three-pillars approach: First, by multilateral engagement, as BRICS governments are strengthening cooperation through enhanced trade frameworks, currency swap agreements, and joint infrastructure projects. The BRICS Trade and Investment Facilitation Initiative streamlines customs procedures and reduces trade barriers. Second, by building alternative institutions, BRICS governments are expanding alternative financial institutions like the NDB while developing new mechanisms such as the BRICS Multilateral Guarantees initiative to de-risk strategic investments. Third, by diplomatic balancing, many BRICS members are pursuing careful balancing acts, maintaining trade relationships with the U.S. while deepening cooperation within the bloc. Countries like Malaysia and Indonesia emphasize independent economic policies rather than ideological alignment. They key issue here is that Australia, New Zealand, all European countries and many Central and South American countries are still not responding to those BRICS’s initiatives. At some time in the near future, they will respond and the question is how! Right now, Saudi Arabia is a great example of balancing between two boats.

Overall, the intersection of BRICS expansion and Trump's tariff threats represents a critical juncture in global economic history. While the U.S. retains significant structural advantages, the emergence of a cohesive BRICS coalition with alternative financial mechanisms signals the dawn of a multipolar economic order. The effectiveness of tariff threats appears limited, potentially accelerating the very trends they aim to prevent. For businesses, investors, and governments, this shift demands strategic adaptation to a world where economic power is increasingly distributed across multiple centers of influence. The success of BRICS in challenging Western dominance will depend on the bloc's ability to overcome internal divisions, develop functional alternatives to existing institutions, and maintain economic growth momentum. However, the trends toward de-dollarization, alternative trade networks, and South-South cooperation appear irreversible, suggesting that the era of unchallenged U.S. economic hegemony is drawing to a close.

[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]