US President Donald Trump has threatened members of the BRICS group of emerging major economies with 10% tariffs on goods imported to the US, in addition to heightened tariffs already looming for some of them. Trump’s focus on BRICS comes at a time when the club appears to be ascendant, with new members joining and more countries waiting in the wings for entry.
The BRICS group, comprising Brazil, Russia, India, China, and South Africa, has expanded to include Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates. Trump’s threats against BRICS are centered on the group’s potential to “degenerate” the US dollar and challenge its dominance in global finance. “BRICS was set up to hurt us, BRICS was set up to degenerate our dollar and take our dollar, take it off as the standard,” Trump said during a cabinet meeting.
The BRICS countries are interested in expanding trade in their national currencies, rather than relying on the US dollar. This aim, if successful, could reduce the dollar dependence of a significant chunk of the global economy. By some estimates, BRICS members account for more than a third of global GDP based on purchasing power parity.
A “cross-border payments initiative” between member countries could potentially become an alternative to the SWIFT inter-bank network, using BRICS countries’ currencies or their digital equivalents.
Bypassing SWIFT and a dollar-denominated trade system has obvious benefits for certain BRICS countries, such as Russia and Iran, as it could allow them to circumvent heavy Western sanctions. Other countries also see a benefit in not relying on the US dollar for trade. China has long looked to make its renminbi an international currency and chip away at what it’s called the US’ “financial hegemony.”
However, reaching a point where BRICS countries can challenge the US dollar’s dominance would be no quick transition. There are likely many different views and competing interests within BRICS on how to get it done, not to mention technical challenges. Brazil’s President Luiz Inácio Lula da Silva noted that global trade needs alternatives to the US dollar, but added that this would be something that “happens gradually” and “carefully.”
The BRICS group is a geopolitical hodgepodge, made up of authoritarian nations, vibrant democracies, and others in between. While members are united by a simple view that the global balance of power skews too much toward the US and its European allies, the group is not necessarily “anti-Western.” However, as Russia and China have faced more friction with the West, observers say both have pushed to shape the group into a more pointed tool to counter US power.