US Tariffs Give BRICS Renewed Momentum

When Donald Trump stormed back into the US presidency, most countries anticipated at least some diplomatic turbulence. But few foresaw the scale of disruption he would inflict on global trade and international relations. The US President’s rhetoric and policies have fundamentally shaken US-BRICS relations with recent attacks on India exemplifying this trend.

India and other emerging economies expected friction. A return to dealmaking as statecraft and transactional diplomacy. What they did not expect was the degree of the assault. Washington’s recent attacks on India and BRICS have gone beyond a confrontation with individual states and have struck at the very foundations of the global trade system.

As economic and financial power shifts eastward and southward, BRICS nations have started moving away from dollar-centric trade and a reliance on developed export markets. Economic growth dynamics have shaped this diversification strategy. US foreign policy is accelerating it.  

This shift is not ideological, it’s pragmatic. Born of necessity in response to Western sanctions, US-imposed tariffs, and Washington’s increasing willingness to weaponize the dollar, states like India, who rely on imported fossil fuels for 80% of their energy needs, have been forced to make use of alternatives to continue trading with key partners like Russia.

While inter-BRICS bilateral trade was once conducted solely in dollars, much is now undertaken in national currencies. Russia-China trade is almost entirely settled in rubles and yuan, while India has increased rupee based settlements. A rupee–ruble payment mechanism is used for India-Russia commerce, and India has further agreements with the UAE and others as it strives to keep pace with the internationalization of China’s renminbi.

When countries are penalized for transacting in US dollars with sanctioned parties, they have no choice but to switch to alternative currencies. As a result, US foreign policy has accelerated the very de‑dollarization Washington claims to oppose. The new wave of tariffs on countries such as South Africa, Brazil, and India will only accelerate this trend further.

India has invested considerable financial and diplomatic resources towards improving relations with the US. New Dheli has publicly disavowed any deliberate campaign to dethrone the dollar and has increased purchases of US weapons systems in recent years. India wanted closer ties with the US to hedge against an overreliance on Russia and embraced the role of counterweight to China as a means of appeasing Washington.  

While this was not the most practical solution for India considering its geography, there was a certain logic to this approach. After all, the US remains India’s largest trade and investment partner. However, erratic US foreign policy has given India no choice but to strengthen its ties with the BRICS, who are rapidly pulling together in response to Trump’s tariffs.  

Trump recently imposed a staggering 50 percent tariff on Brazilian goods, citing the prosecution of former president Jair Bolsonaro. Although some 700 products may be exempted from these levies (illustrating the limits of America’s ability to absorb the costs of its own trade policy), this remains a blatant attack on Brazil’s independence and that of its judiciary. 

In response, China stepped in, fast‑tracking approvals for nearly 200 Brazilian coffee exporters.  In the last year, Brazil has shipped almost 20% of its total coffee output to the US, netting just shy of $2 billion. However, Chinese demand is growing faster with coffee consumption rising 15 percent in the most recent season and coffee shop openings surging 60 percent in a year to nearly 50 000 outlets nationwide.

Trump has defended his tariffs as an effort to rebalance trade. Yet his broader strategy threatens to marginalize US economic leadership and accelerate BRICS integration. His rhetoric has been equally undiplomatic with social media posts calling India and Russia “dead” economies, even though both countries have been growing faster than the US in recent years.

At the same time, many economic indicators suggest the US may face a recession as a result of the tariffs combined with restrictive immigration policies. Moody’s senior economist Mark Zandi has warned that the country is “on the precipice”, pointing to a slowdown in the labour market in the US which is at its weakest since 2020.

Other metrics also flash warning signs, with consumer spending flat, inflation still above target, and factory activity contracting for a fourth month in a row, while interest rates cuts have been put on hold. Meanwhile, despite the new tariffs, India’s growth forecast remains unchanged at 6.5% because exports make up a relatively modest share of its $4 trillion economy.

There is an expression about shooting and one’s foot that comes to mind. Bloomberg claims India will no longer purchase F-35s from the US and recent diplomatic overtures suggest India will now seek to improve relations with China. This removes the weakest link in BRICS, which the West may have hoped to exploit to regain its former hegemony. 

For some analysts, Chinese President Xi Jinping’s absence from the recent BRICS summit in Brazil indicated BRICS waning relevance. However, Xi had already visited Brazil earlier in the year and has plans to return to Brazil again in 2025 for the UN climate conference. Xi’s decision to step aside effectively paved the way for Narendra Modi to be received as guest of honour at the same time the BRICS chairmanship passed from Brazil to India.

This gesture of goodwill did not go unnoticed in New Delhi, who reciprocated by sending their foreign minister to Beijing for the first time in five years. Following the latest US tariffs on India, the Indian media is reporting that Modi will now also visit China. This will be the Indian leader’s first visit in seven years, marking a significant thaw in relations between the two countries.

This reaction should come as no surprise. While the US President has accused India of funding Russia’s war in Ukraine, India cannot comply with Trump’s demand to stop purchasing Russian energy. Long term contracts are legally binding, global oil prices would spike, and the economy cannot function without these energy supplies. It’s a non-starter.  

Washington’s moral posturing is also hypocritical considering it still purchases uranium from Russia, accounting for some 20% of the nuclear fuel used in US reactors, thus funding the war in Ukraine on both sides. The EU also continues to purchase large quantities of Russian LNG, as noted in a scathing press release by India’s Ministry of External Affairs.

If BRICS were genuinely an ideological rival to Western-led institutions, wouldn’t they be the ones pulling out of the Paris Climate Agreement, World Health Organization, and UN human rights bodies, like UNESCO? In reality, the United States is shunning global responsibilities, while BRICS is welcoming new members and expanding co-operation with other countries.   

Trump may believe his tariffs will harm BRICS, while unwittingly ensuring the bloc's success. Sanctions and tariffs may inflict short term pain but in the long run they could backfire. India mending ties with China, and refusing to stop buying Russian oil, certainly suggests as much.