BRICS is Dead!

In a renewed attack on the BRICS economic alliance, current US President Donald Trump has claimed that the bloc was established for a "bad purpose" and is now "dead." Trump's latest remarks come as BRICS nations continue to explore alternatives to the US dollar, a move that has drawn sharp criticism from the United States.

Trump’s Warning to BRICS Nations

During a public address, Trump made it clear that any country attempting to challenge the dominance of the US dollar would face severe economic consequences. He declared that the United States would impose a 100% tariff on nations that attempt to undermine the dollar’s role in global trade.

“The BRICS was put there for a bad purpose, and most of those people don’t want it. They don’t even want to talk about it now. They’re afraid to talk about it because I told them if they want to play games with the dollar, then they’re going to be hit with a 100 per cent tariff,” Trump stated.

He further claimed that BRICS ceased to be relevant the moment he made his stance clear. “BRICS is dead since I mentioned that. BRICS died the minute I mentioned that,” he added.

Trump’s statement comes after previous warnings to BRICS nations against forming a new currency or attempting to replace the US dollar as the dominant global reserve currency. His stance highlights a growing concern within the US administration over the shifting balance of economic power.

What is BRICS?

BRICS, an acronym for Brazil, Russia, India, China and South Africa, was established in 2009 as an economic coalition aimed at promoting cooperation among major emerging markets. Over the years, its membership has expanded to include Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates, making it a significant international group that does not include the United States.

Some BRICS members, particularly Russia and China, have actively sought alternatives to the US dollar, proposing the creation of a BRICS currency or expanding trade settlements using their national currencies. However, India has remained cautious and has yet to fully support the idea of de-dollarisation.

The Push for De-Dollarisation

At the 15th BRICS Summit in 2023, Russian President Vladimir Putin called for expanding the use of national currencies in trade, a sentiment echoed in June 2024 during the BRICS foreign ministers’ meeting in Russia’s Nizhny Novgorod. The ministers advocated for the increased use of local currencies in both bilateral and multilateral trade and financial transactions.

Despite this push, there remains uncertainty over whether BRICS nations can successfully create a viable alternative to the US dollar. While some member states support de-dollarisation, others, like India, remain cautious about fully committing to such a shift.

The Impact of a 100% Tariff on BRICS Nations

If the US were to impose a 100% tariff on BRICS nations, the economic consequences would be substantial.

1. Increased Costs for Imports – Countries exporting goods to the US would face significantly higher costs, making their products less competitive in the American market. This could lead to a decline in trade volumes and financial losses for businesses reliant on US consumers.
2. Supply Chain Disruptions – Many BRICS nations are integral to global supply chains. A tariff of this magnitude could cause price inflation, delays and sourcing challenges for US businesses that rely on imports from BRICS countries.
3. Economic Retaliation – BRICS nations could respond with counter-tariffs on American goods, leading to a trade war that could disrupt global markets and weaken economic growth.
4. Currency and Market Instability – A shift away from the dollar could decrease demand for US currency, leading to fluctuations in exchange rates and potential instability in financial markets.

Conclusion

The future of BRICS remains uncertain amid increasing tensions with the United States. While the bloc continues its efforts to diversify trade and reduce reliance on the dollar, US threats of economic retaliation present a significant challenge. If tariffs are imposed, BRICS nations would likely suffer immediate economic consequences, but over the long term, such pressures could accelerate their push towards alternative financial systems.

Whether BRICS can withstand these challenges and successfully develop a multi-currency trading system remains to be seen. However, one thing is clear. Global economic dynamics are shifting, and the coming years will be critical in determining the role of BRICS in shaping the future of international trade.

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