President-elect Trump has threatened to impose “100% tariffs” on the BRICS bloc if it creates its own currency or backs an alternative to the US dollar. What would this mean in practice? Let’s break it down.
🔸 The US has a $433.5 billion trade deficit with BRICS. None of the BRICS partners or candidate nations (over 50 countries in total) have significant trade deficits with the US, with Vietnam posting a $104.62 billion surplus in 2023.
🔸 The US depends on BRICS for a wide range of physical goods, from machinery and pharmaceuticals to rare earth minerals, with the bloc accounting for 40%-70% of production in these sectors. Meanwhile, the US’s main exports – arms, petroleum, food, and cars – are widely available globally, especially within BRICS countries.
🔸 Services and intellectual property, which made up $1.1 trillion in US exports in 2023, could be gradually replaced by domestic alternatives in BRICS countries. These include things like franchising, design, software, and consulting services.
🔸 The US dollar, as the world’s reserve currency, is a major export in itself. However, BRICS economies, led by Russia, have already begun reducing their reliance on US debt and the dollar by shifting to local currencies in trade, now accounting for 65% of BRICS-to-BRICS transactions.
In another opinion, an economist has said that slapping 100% tariffs on BRICS bloc would trigger a trade war US ‘will lose’.
His words “Trump thinks he can target BRICS countries individually but doing this will cause BRICS to act collectively in response and then the situation is about who has the bigger overall trade, population and resources,” renowned British economist Dr. Rodney Shakespeare told Sputnik, commenting on the president-elect’s threat to slap 100% tariffs on BRICS countries if they attempted to ditch the dollar.
“Trump’s thinking is fundamentally based upon a situation of past hegemony whose time is rapidly passing,” Shakespeare stressed, pointing out that while tariffs would be grossly illegal, perhaps the president-elect “thinks rules are meant for others and not for the USA.”
If Trump made good on the threats, there would also be “huge increases on American-imported consumer products,” the economist said.
“Trump hopes that American industry would then revive sufficiently to produce the same products at cheaper cost. That could happen, except that the new factories will not produce large numbers of jobs (they will be near-automated),” the professor added.
In other words, Trump’s proposed slap-on-tariffs-first-and-ask-questions-later approach to trade carries grave risks for Washington, according to Dr. Shakespeare. “Since economic power is shifting away from the USA,” a new trade war “could be a war which the US will lose,” he summed up.
Source: Sputnik Int
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