Trump Needs BRICS To Fulfil Campaign Promises

Donald Trump is well known for being somewhat flexible with the truth and his first weeks in office have done little to change that impression. Having pledged to radically reduce the US budget deficit, reindustrialise the country, and end the war in Ukraine within 24 hours, Trump is struggling to deliver on his promises and may need help from the BRICS to achieve these ambitious goals.

While important progress is being made towards ending the War in Ukraine thanks to the US President’s willingness to engage with the Kremlin, Trump’s domestic policy objectives still face several obstacles which make their success less likely than an eventual settlement with Russia.     

For example, while Trump has effectively closed the US border, promised mass deportations have yet to materialise. Only 37,660 individuals were deported during Trump’s first month in office, significantly lower than the monthly average of 57,000 under Biden, and the much publicised use of military aircraft for deportations has already been shelved due to the high costs involved.

The Budget Deficit

Trump has repeatedly expressed a desire to achieve a balanced federal budget. However, his Republican controlled House of Representatives has already approved a $4 trillion increase in the US debt ceiling as well as a Continuing Resolution to maintain spending at 2024 levels through September.

The US government has ended the fiscal year with a budget surplus only four times in the last 50 years and has just posted a record year-to-date deficit. The US budget deficit for the first five months of fiscal 2025 reached a record high of almost $1.2 trillion, including a $307 billion deficit just in February alone.  

While the new administration has boasted about pursuing reductions in the federal workforce, civilian government employees account for less than 5% of the federal budget. The Department of Education, which Trump has repeatedly threatened to shut down, is the smallest cabinet level US government department, employing only around 4000 staff.

At the same time, savings claimed by Elon Musk’s much-touted Department of Government Efficiency (DOGE) have also faced scrutiny. DOGE has exaggerated savings, counted reductions multiple times, and taken credit for programs that already expired, including two Coast Guard contracts concluded in 2005 and 2006 under George W. Bush.

A substantial portion of federal expenditure (around 75%) is allocated to Social Security, Medicare, Medicaid, Defence, Veterans’ Benefits, and interest payments on the national debt. Significant cuts to these programs remains an unlikely prospect for obvious political reasons, limiting the scope for meaningful deficit reduction despite bold promises.

The Trade Deficit

Perhaps the boldest promise from all three of Trump’s election campaigns was that he would bring high paying manufacturing jobs back to the United States using tariffs. However, this pledge could prove the most difficult to fulfil. Since the beginning of Trump’s first term in 2016, manufacturing as a share of the US economy has fallen to just 10% of US GDP.

Tariffs are unlikely to reindustrialise the US. They may even increase production costs by raising inflation, wages, and the inputs to manufacturing. Higher interest rates could then make borrowing money to build factories more expensive and lead to a recession which would reduce domestic demand and remove the incentive to increase domestic production capacity.

Combined with tax incentives and a weaker dollar, a co-ordinated industrial policy could theoretically help partially reshore some industries. However, this reindustrialisation process could take decades and would likely produce other negative economic effects.

Tax cuts for manufacturers could produce larger budget deficits and higher debt servicing costs necessitating more quantitative easing to monetize government debts. This could weaken the dollar, produce more inflation, lower consumption, and lead to an economic contraction.

Russia, China, Iran

Trump has cast doubt on whether the US would defend NATO states that do not meet their spending commitments and a resurgent Russia plays into his hands. If the US pledged to only defend countries who spend 5% of their GDP on US military equipment this would boost US defence exports by as much as $1 trillion, offsetting most of the trade deficit.

Trump has frequently condemned NATO members that do not meet the alliance's 2% of GDP defence spending requirement and has already suggested increasing the mandatory contribution to 5%. That said, only five members, including the US, currently exceed 3%, with Poland the only member who allocates more than 4% of GDP to defence.

As long as the US taxpayer funds Europe’s security, there is little motivation for EU states to actually hit their NATO spending targets. Meanwhile, a negotiated settlement that leaves Russia in a strong position in Ukraine could encourage America’s NATO allies to purchase more US weapons systems in order to secure long-term US protection. 

Of course, there is still the issue of the US budget deficit, which could eventually see US spending cuts reach the Pentagon. If Trump is serious about balancing the budget he may need to reach agreements with China and Iran similar to the potential agreements currently being negotiated with Russia. In other words, agreements with the BRICS could hold the key to smaller deficits.   

Trump has already publicly floated the idea of the US and Russia halving their military expenditure after ending what US Secretary of State Marco Rubio now openly admits is a proxy war in Ukraine. Putin has expressed enthusiasm for the idea. A similar arrangement could be worked out with Beijing, with China perhaps purchasing more US Treasuries and farm produce in exchange for the US lending its support for the reunification of Taiwan with the Mainland.  

The Kremlin has also already offered to mediate talks between the US and Iran to restore the nuclear deal and reduce tensions in West Asia. While Tehran remains sceptical of Trump’s intentions, removing the threat of a major war in the Middle East could go a long way towards reducing the inflationary risks associated with such a conflict. This would certainly make it easier for the US to fund its twin deficits while attempting to reduce them.