US President-elect Donald Trump has issued a stern warning to the BRICS nations, which have been vocal about challenging the dollar’s supremacy in global trade. Should this movement gain momentum, Trump has pledged to implement “100% tariffs,” effectively severing their access to the “thriving US economy.” This raises the question: which country will be most affected? Here are the economic relationships and dependencies to determine which nations may be in jeopardy.
The warning
“We demand assurance from these countries that they will not establish a new BRICS currency or support any alternative currency to supplant the powerful US Dollar, or they will encounter 100% tariffs and should prepare to lose access to the thriving US economy,” Trump stated in a Saturday post on Truth Social.
“They can seek another ‘sucker.’ There is no possibility that the BRICS will replace the US Dollar in international trade, and any nation that attempts to do so should bid farewell to America,” he continued.
This warning follows Trump’s recent commitment to impose tariffs on Canada, Mexico, and China upon his inauguration on January 20, 2025. China has already been a focal point of his rhetoric, with Trump previously threatening tariffs ranging from 60% to 100% on imports from the country. However, such tariffs would ultimately impact American businesses and consumers who purchase goods from China, as they would bear the increased costs.
China was one of the founding members of the BRICS group, which originally included Brazil, Russia, India, and later South Africa, but has since expanded to incorporate Egypt, the UAE, Ethiopia, and Iran. Türkiye, Azerbaijan, and Malaysia have applied for membership, with several other countries also showing interest in joining BRICS.
Some members are keen to lessen their dependence on the US dollar, which has been the leading global currency since the end of World War II, facilitating over 80% of international trade.
In October, Russian President Vladimir Putin emphasized the need to counter the US’s use of the dollar as a political tool. At this year’s BRICS Summit, he showcased what appeared to be a prototype of a potential currency for the bloc. However, he clarified that BRICS does not aim to completely abandon the dollar-centric SWIFT system, but rather to develop an alternative.
“We are not rejecting or opposing the dollar, but if we are restricted in our ability to use it, we must seek other options, which is already in progress,” Putin stated.
In 2023, Brazilian President Luiz Inacio Lula da Silva raised concerns about the necessity of the dollar’s dominance in global trade. Concurrently, a senior Russian official suggested that BRICS countries are actively considering the establishment of their own currency, which could transform the landscape of international trade.
Following his electoral win, which was partly driven by a commitment to impose stringent tariffs on foreign goods, Trump intensified his hardline approach by threatening the entire BRICS coalition with 100% tariffs if they move forward with their currency initiatives. Who is assuming the greatest risk?
The risks associated with BRICS countries are as follows:
Iran
Exports to the US: Minimal, primarily due to existing sanctions.
The US as an export destination: Not a major trading partner.
Risk assessment: Low. Current sanctions have already limited trade, meaning that any additional tariffs would likely have little effect.
Ethiopia
Exports to the US: Limited, mostly consisting of agricultural goods.
The US as an export destination: Not among the top five trading partners.
Risk assessment: Low. While the US represents a market for Ethiopian products, the overall trade volume is relatively small, which diminishes the potential impact.
Russia
Exports to the US: Primarily focused on mineral fuels and precious metals.
The US as an export destination: Not one of the top five partners.
Risk assessment: Low to moderate. Although the US is an important market, Russia’s diversified export portfolio and the current geopolitical situation limit trade opportunities, particularly following the escalation of tensions in Ukraine in 2022, which may lessen the effects of any new tariffs.
Egypt
Exports to the US: Predominantly textiles and agricultural products.
The US as an export destination: Not among the top five partners.
Risk assessment: Moderate. The US is a significant market for Egyptian textiles, so the imposition of tariffs could adversely impact this sector.
South Africa
Exports to the US: Major exports include vehicles and minerals.
The US as an export destination: Not one of the top five partners.
Risk assessment: Moderate to high. The automotive industry, a crucial component of South Africa’s economy, may encounter serious challenges due to potential tariffs.
United Arab Emirates
Exports to the US: Mainly consist of petroleum products, aluminum, and precious metals.
The US as an export destination: Not among the top five partners.
Risk assessment: Moderate to high. Key sectors such as aluminum could suffer significantly, potentially disrupting the UAE’s trade balance.
India
Exports to the US: Key exports consist of pharmaceuticals, textiles, and machinery.
The US as export destination: Primary export partner.
Risk assessment: High. The US represents a significant market for Indian products, and potential tariffs could adversely impact various sectors, particularly IT services and textiles.
Brazil
Exports to the US: Major exports include crude petroleum and aircraft.
The US as export destination: Second-largest export partner.
Risk assessment: High. Brazil’s economy is heavily dependent on the US market, particularly for high-value items like aircraft, making it susceptible to tariff impacts.
China
Exports to the US: Major exports include electronics, machinery, and textiles.
The US as export destination: Largest export partner.
Risk assessment: Very High. As the top exporter to the US, China would experience severe economic consequences from a 100% tariff, affecting a wide range of industries. Additionally, outside the BRICS framework, previous tariff threats from Trump may have prompted China to explore alternative strategies.
BRICS nations are considering ways to counter US economic supremacy, but they must proceed with caution, as the US maintains a strong trade position, particularly with the assertive policies of President-elect Trump. The US continues to be a primary export market for major BRICS countries such as China, India, and Brazil, which are significantly dependent on American markets. The combination of America’s substantial economic influence and Trump’s history of aggressive trade strategies enables Washington to apply considerable pressure on individual BRICS members.
Potential Consequences for the US
If implemented, Trump’s tariffs could have repercussions not only for certain BRICS economies but also for the US itself. The following outlines the potential outcomes:
Increased expenses for American consumers
China: As the leading exporter to the US, a 100% tariff on Chinese products (including electronics, machinery, and textiles) would result in significant price increases.
Consequences: The rise in prices for essential consumer items would fuel inflation, leading to a higher cost of living for Americans, particularly impacting low- and middle-income families.
Disruptions in supply chains
India and Brazil: India plays a crucial role in supplying pharmaceuticals, while Brazil is a key exporter of crude oil, agricultural goods, and aircraft parts.
Consequences: Imposing 100% tariffs could result in shortages or escalated costs in vital sectors such as healthcare and aviation. US manufacturers may struggle to swiftly replace these imports.
Retaliatory Tariffs
BRICS+ countries are expected to implement retaliatory tariffs on exports from the United States, affecting sectors such as agriculture, machinery, and technology.
Impact: This situation would likely result in diminished access to crucial international markets for US farmers and manufacturers, undermining their competitiveness and potentially leading to job losses in these industries.
Geopolitical Consequences
Economic Isolation: By focusing on BRICS+, the United States may inadvertently expedite these nations’ initiatives to reduce reliance on the dollar in the global economy, which could ultimately weaken the dollar’s influence.
Impact: Such a shift could compromise the US’s standing in global finance, limiting its capacity to leverage economic power for geopolitical influence.
Stock Market Volatility
The interplay of inflation, supply chain challenges, and a decline in international trade is poised to create turmoil in financial markets.
Impact: This environment may prompt investors to withdraw, resulting in stock price fluctuations and potentially stifling business investment.
The US industries most likely to be adversely affected include:
Electronics and Technology
Primary Source: China
Effect: China plays a crucial role in the supply of electronics, including smartphones, computers, and semiconductors. The imposition of a 100% tariff would significantly elevate costs, making it challenging for domestic tech firms to obtain affordable components, which could result in higher prices for consumers and hinder innovation.
Pharmaceuticals
Primary Source: India
Effect: India is a key provider of generic medications and active pharmaceutical ingredients to the US market. The introduction of tariffs would likely increase healthcare expenses, potentially leading to shortages and a greater dependence on costly alternatives.
Automotive
Primary Sources: South Africa and Brazil
Effect: South Africa is a significant exporter of vehicles and parts, while Brazil supplies essential materials like steel and aluminum. Tariffs would disrupt existing supply chains, escalating manufacturing costs for automobiles and ultimately raising prices for consumers.
Aerospace
Primary Source: Brazil
Effect: Brazil’s aircraft sector, notably Embraer, supplies components and aircraft to US firms. The implementation of tariffs would hinder this partnership, resulting in increased costs for airlines and aerospace manufacturers.
Agriculture and Food
Primary Source: BRICS Nations
Consequences: Imports such as coffee from Brazil, tea from India, fruits, and seafood sourced from BRICS nations would likely see significant price hikes, leading to increased costs for consumers in the United States and causing disruptions in food supply chains.
While implementing 100% tariffs may resonate with Trump’s ‘America First’ agenda and potentially provide a temporary uplift to domestic industries, the long-term implications are considerably more detrimental. Consumers would face higher prices, supply chains would be affected, and BRICS nations might respond with retaliatory measures—all of which could hinder US economic growth, elevate inflation, and undermine the dollar’s global standing.
Future Outlook
Is it possible for BRICS to respond to the tariffs?
Indeed, there are multiple strategies they could adopt. Firstly, they might enhance trade relationships within the bloc to lessen dependence on US markets. Furthermore, they could seek to establish stronger trade connections with non-aligned countries. Utilizing local currencies for trade could also encourage BRICS to develop a payment system independent of the dollar. Nations heavily reliant on US imports might consider subsidizing impacted sectors to sustain their competitiveness while shifting towards alternative markets. Additionally, BRICS members could amplify their global economic influence by portraying US tariffs as detrimental to international trade stability.
Is de-dollarization truly feasible?
The concept of diminishing dependence on the dollar in global trade and finance is gaining traction. Nevertheless, even if the BRICS nations pursue this strategy, the challenge remains significant due to the entrenched dominance of the US dollar, which is founded on trust, liquidity, and the extensive use of dollar-denominated assets. To replace or even reduce its role in international trade, there is a need for not only new technical infrastructure but also a broad consensus among global trading partners to embrace it. Recent trends, such as increased transactions in local currencies and discussions around a BRICS currency, indicate a serious commitment, but the journey is likely to be gradual. For the time being, the group can focus on incremental measures, such as developing and launching independent digital payment systems.
A mathematical model published in 2023 in ‘Applied Network Science’ suggests that BRICS has significant potential to achieve prominence in international trade through a unified currency. The study indicates that, based solely on trade flows and without considering political influences, approximately 58% of countries would favor a BRICS-backed currency over the US dollar (19%) or euro (23%).
Could Trump actually introduce tariffs?
The introduction of tariffs by Trump appears to be a plausible scenario. His campaign rhetoric has consistently favored protectionist measures, and his prior administration demonstrated a readiness to implement tariffs to further his political and economic objectives, as evidenced by the trade conflict with China. Nevertheless, the possibility of increased prices could provoke public dissent, potentially hindering such actions. Additionally, U.S. allies in Europe and elsewhere might resist tariffs if they threaten to disrupt global trade and economic stability. It is also worth noting that Trump has a history of using threats as a strategic maneuver without necessarily acting on them, which he may be doing once more.
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