US tariffs and BRICS: Catalyst for multipolarity
This article is authored by Ananya Raj Kakoti, scholar, international relations, Jawaharlal Nehru University, New Delhi.
The recent tariff threats by President Trump against BRICS nations have sparked significant discussions on the future of global trade and economic multipolarity. The imposition of 100% tariffs on BRICS exports to the United States (US) is framed as a measure to deter de-dollarization efforts, yet it may accelerate the very process it seeks to prevent. Given that BRICS nations account for nearly 55% of the world’s population and 45% of global Gross Domestic Product (GDP), their decoupling from the US economy could have substantial long-term consequences.
The US, which once dominated global trade, now accounts for approximately 15% of world trade, a decline from 20% in 2018. This decreasing significance weakens the impact of US tariffs as BRICS nations are increasingly trading among themselves and diversifying markets. China, representing the largest portion of BRICS exports to the US, is in a strong position to adjust within three years. Other BRICS nations, such as India and Brazil, may take a little longer but will ultimately find alternative markets, mitigating the impact of US tariffs. Additionally, countries like Russia and South Africa have already been focusing on regional trade partnerships, further diminishing the potential effects of US tariffs on their economies.
On the domestic front, these tariffs could lead to unintended consequences for the US economy. Supply chain disruptions, rising costs of imports, and inflationary pressures could affect American consumers, particularly low-income groups and retirees. A potential 3-6% increase in core inflation may drive the Federal Reserve to raise interest rates, further exacerbating economic inequality. The increase in borrowing costs will impact investment, housing, and consumer spending, putting additional strain on economic growth. Moreover, American businesses reliant on imported raw materials and components will face higher production costs, reducing competitiveness and leading to potential job losses.
The effectiveness of these tariffs in revitalising American manufacturing is also questionable. Manufacturing requires not only capital investment in machinery but also a skilled workforce. The US faces challenges in both areas, as years of financialisation have shifted focus away from industrial growth. Additionally, the current political climate, which often discourages reliance on skilled immigration, may further hinder industrial expansion. Instead of fostering domestic manufacturing, the tariffs may merely redistribute trade relationships, with countries like Germany, Japan, and South Korea filling supply chain gaps. Furthermore, automation and AI-driven production are reshaping global manufacturing, making traditional tariff-based protectionist policies less effective in the long-run.
The broader geopolitical implications of this policy shift suggest a move toward greater economic multipolarity. The BRICS nations are already exploring alternatives to the US dollar in trade settlements, with initiatives like BRICS Clear aiming to reduce dependency on the greenback. By weaponizing tariffs, the US risks pushing BRICS further toward alternative financial systems, strengthening their resolve to establish independent trade mechanisms. This shift could erode US dollar hegemony and diminish America’s influence in global economic affairs. Additionally, with China leading efforts to internationalise the yuan and India developing its digital currency frameworks, the US may find itself increasingly sidelined in global financial transactions.
Moreover, the imposition of tariffs risks straining diplomatic relations between the US and BRICS nations. While the US justifies these tariffs as necessary to protect its economy, BRICS nations perceive them as economic aggression. This could push BRICS to deepen military and technological collaborations, as evidenced by growing cooperation between Russia and China in defence technology and Brazil’s increasing engagement with China in AI and green energy sectors. In the long term, the US might find itself diplomatically isolated, with traditional allies like the European Union hesitant to support unilateral tariff measures that disrupt global trade stability.
The economic repercussions of the tariffs extend beyond direct trade barriers. Global supply chains are deeply interconnected, and any major disruption affects industries worldwide. US-based multinational corporations with production facilities in BRICS nations will face operational challenges, affecting profitability and stock market performance. Companies relying on rare earth minerals, semiconductors, and essential industrial components from BRICS suppliers will need to reconfigure their supply chains, leading to increased costs and potential production slowdowns.
Additionally, BRICS nations have been steadily advancing their economic initiatives to reduce dependency on western-dominated financial systems. The BRICS New Development Bank (NDB) is increasing its lending capacity, allowing member nations to finance projects without relying on institutions like the IMF or World Bank. This shift enables greater financial autonomy and strengthens the economic bloc’s resilience against western economic pressures. If the US continues its aggressive tariff policies, it risks further incentivising non-western nations to collaborate on new financial instruments, reinforcing multipolarity in the global economic order.
Another critical consideration is the potential for retaliatory tariffs. BRICS nations, particularly China and India, are major buyers of US agricultural products, technology, and energy exports. Any reciprocal tariffs these nations impose could significantly impact American farmers and tech firms reliant on BRICS markets. The US-China trade war in the past demonstrated that such retaliatory measures can lead to prolonged economic uncertainty, negatively affecting stock markets and business investments.
The long-term ramifications of these tariffs also extend to global governance. BRICS nations have been advocating for a more inclusive and balanced world order, challenging the dominance of Western-led institutions. The US’s trade policies could accelerate the formation of alternative multilateral frameworks, reducing the effectiveness of traditional economic sanctions and financial restrictions. Countries outside BRICS, particularly in Africa, Latin America, and Southeast Asia, may align themselves with these emerging economic coalitions, diminishing the US’s ability to unilaterally dictate global trade policies.
While Trump’s tariff strategy aims to reinforce US economic dominance, it may ultimately accelerate trends that undermine it. BRICS nations are likely to adapt to new trade realities, diversify economic ties, and reduce reliance on the US. Meanwhile, the American economy will face internal pressures, including inflation, higher borrowing costs, and potential supply chain challenges. Rather than deterring multipolarity, these tariffs may expedite the emergence of a global economic order less centred on the US. Furthermore, these economic shifts may prompt a reconsideration of global trade policies, encouraging nations to focus on sustainable and cooperative trade strategies rather than retaliatory economic measures. If the US continues down this path, it risks ceding its global economic influence to an emerging network of resilient and adaptive economies.
This article is authored by Ananya Raj Kakoti, scholar, international relations, Jawaharlal Nehru University, New Delhi.
The recent tariff threats by President Trump against BRICS nations have sparked significant discussions on the future of global trade and economic multipolarity. The imposition of 100% tariffs on BRICS exports to the United States (US) is framed as a measure to deter de-dollarization efforts, yet it may accelerate the very process it seeks to prevent. Given that BRICS nations account for nearly 55% of the world’s population and 45% of global Gross Domestic Product (GDP), their decoupling from the US economy could have substantial long-term consequences.
The US, which once dominated global trade, now accounts for approximately 15% of world trade, a decline from 20% in 2018. This decreasing significance weakens the impact of US tariffs as BRICS nations are increasingly trading among themselves and diversifying markets. China, representing the largest portion of BRICS exports to the US, is in a strong position to adjust within three years. Other BRICS nations, such as India and Brazil, may take a little longer but will ultimately find alternative markets, mitigating the impact of US tariffs. Additionally, countries like Russia and South Africa have already been focusing on regional trade partnerships, further diminishing the potential effects of US tariffs on their economies.
On the domestic front, these tariffs could lead to unintended consequences for the US economy. Supply chain disruptions, rising costs of imports, and inflationary pressures could affect American consumers, particularly low-income groups and retirees. A potential 3-6% increase in core inflation may drive the Federal Reserve to raise interest rates, further exacerbating economic inequality. The increase in borrowing costs will impact investment, housing, and consumer spending, putting additional strain on economic growth. Moreover, American businesses reliant on imported raw materials and components will face higher production costs, reducing competitiveness and leading to potential job losses.
The effectiveness of these tariffs in revitalising American manufacturing is also questionable. Manufacturing requires not only capital investment in machinery but also a skilled workforce. The US faces challenges in both areas, as years of financialisation have shifted focus away from industrial growth. Additionally, the current political climate, which often discourages reliance on skilled immigration, may further hinder industrial expansion. Instead of fostering domestic manufacturing, the tariffs may merely redistribute trade relationships, with countries like Germany, Japan, and South Korea filling supply chain gaps. Furthermore, automation and AI-driven production are reshaping global manufacturing, making traditional tariff-based protectionist policies less effective in the long-run.
The broader geopolitical implications of this policy shift suggest a move toward greater economic multipolarity. The BRICS nations are already exploring alternatives to the US dollar in trade settlements, with initiatives like BRICS Clear aiming to reduce dependency on the greenback. By weaponizing tariffs, the US risks pushing BRICS further toward alternative financial systems, strengthening their resolve to establish independent trade mechanisms. This shift could erode US dollar hegemony and diminish America’s influence in global economic affairs. Additionally, with China leading efforts to internationalise the yuan and India developing its digital currency frameworks, the US may find itself increasingly sidelined in global financial transactions.
Moreover, the imposition of tariffs risks straining diplomatic relations between the US and BRICS nations. While the US justifies these tariffs as necessary to protect its economy, BRICS nations perceive them as economic aggression. This could push BRICS to deepen military and technological collaborations, as evidenced by growing cooperation between Russia and China in defence technology and Brazil’s increasing engagement with China in AI and green energy sectors. In the long term, the US might find itself diplomatically isolated, with traditional allies like the European Union hesitant to support unilateral tariff measures that disrupt global trade stability.
The economic repercussions of the tariffs extend beyond direct trade barriers. Global supply chains are deeply interconnected, and any major disruption affects industries worldwide. US-based multinational corporations with production facilities in BRICS nations will face operational challenges, affecting profitability and stock market performance. Companies relying on rare earth minerals, semiconductors, and essential industrial components from BRICS suppliers will need to reconfigure their supply chains, leading to increased costs and potential production slowdowns.
Additionally, BRICS nations have been steadily advancing their economic initiatives to reduce dependency on western-dominated financial systems. The BRICS New Development Bank (NDB) is increasing its lending capacity, allowing member nations to finance projects without relying on institutions like the IMF or World Bank. This shift enables greater financial autonomy and strengthens the economic bloc’s resilience against western economic pressures. If the US continues its aggressive tariff policies, it risks further incentivising non-western nations to collaborate on new financial instruments, reinforcing multipolarity in the global economic order.
Another critical consideration is the potential for retaliatory tariffs. BRICS nations, particularly China and India, are major buyers of US agricultural products, technology, and energy exports. Any reciprocal tariffs these nations impose could significantly impact American farmers and tech firms reliant on BRICS markets. The US-China trade war in the past demonstrated that such retaliatory measures can lead to prolonged economic uncertainty, negatively affecting stock markets and business investments.
The long-term ramifications of these tariffs also extend to global governance. BRICS nations have been advocating for a more inclusive and balanced world order, challenging the dominance of Western-led institutions. The US’s trade policies could accelerate the formation of alternative multilateral frameworks, reducing the effectiveness of traditional economic sanctions and financial restrictions. Countries outside BRICS, particularly in Africa, Latin America, and Southeast Asia, may align themselves with these emerging economic coalitions, diminishing the US’s ability to unilaterally dictate global trade policies.
While Trump’s tariff strategy aims to reinforce US economic dominance, it may ultimately accelerate trends that undermine it. BRICS nations are likely to adapt to new trade realities, diversify economic ties, and reduce reliance on the US. Meanwhile, the American economy will face internal pressures, including inflation, higher borrowing costs, and potential supply chain challenges. Rather than deterring multipolarity, these tariffs may expedite the emergence of a global economic order less centred on the US. Furthermore, these economic shifts may prompt a reconsideration of global trade policies, encouraging nations to focus on sustainable and cooperative trade strategies rather than retaliatory economic measures. If the US continues down this path, it risks ceding its global economic influence to an emerging network of resilient and adaptive economies.
This article is authored by Ananya Raj Kakoti, scholar, international relations, Jawaharlal Nehru University, New Delhi.
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