Introduction: What is the issue?

  • At the 17th BRICS Summit held in Rio de Janeiro (July 2025), U.S. President Donald Trump threatened to impose a 10% tariff on all countries aligned with the BRICS grouping.
  • This move marks a sharp escalation in U.S. trade policy and reflects Trump's larger geopolitical objective: to counter what he sees as an emerging anti-American coalition challenging U.S. economic dominance, especially the hegemony of the U.S. dollar.

ABOUT BRICS

Aspect Details
Founded 2009 (originally BRIC); South Africa joined in 2010
Members (2025) Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Indonesia, UAE
Global Share (2025) 25% of global GDP ($28 trillion); 45% of world population
Recent Developments Proposed BRICS Payment System, growing calls for use of local currencies in trade
Strategic Goal Promote multipolarity, enhance Global South cooperation, reduce Western dependency

THE REASONS

A. De-Dollarisation Efforts Trump sees BRICS as threatening the U.S. dollar’s global reserve status, which underpins American global influence.

Key reasons for his concern:

  • Proposals for a BRICS common currency to settle trade and reduce dollar reliance.
  • Cross-Border Payments Initiative (CBPI):
    • Developed by the BRICS Payment Task Force.
    • Aims to facilitate intra-BRICS trade through local currencies and interoperability of national systems.
    • Accelerated after Western sanctions on Russia disrupted international payments.
  • Statements from BRICS summits (2023 in South Africa, 2024 in Russia) promoted alternative payment systems.
Though no concrete currency has been adopted, the political signaling is what Trump sees as a direct challenge. B. Political Distrust and Anti-Western Alignment Trump has repeatedly referred to BRICS as:
  • "Anti-American"
  • "A platform for China and Russia to build a new global system"
The inclusion of Iran and Russia, both sanctioned by the U.S., fuels American fears of a parallel economic order emerging outside U.S. control.

ACTIONS TAKEN OR PROPOSED BY USA

Measure Target Justification
10% blanket tariff All BRICS members Announced July 6, 2025 — "for being in BRICS"
Earlier threat: 100% tariff BRICS (Nov 2024) If they move toward a BRICS currency
50% tariff on Brazil Brazil Alleged political persecution of former President Bolsonaro
30% tariff on South Africa South Africa Accusations of unfair trade; treatment of White minorities
Proposed 500% tariff Russian oil/products Under "Sanctioning Russia Act of 2025"; affects India and China as importers

ADDITIONAL CONTEXT

  • Trump's "America First 2.0" trade agenda includes plans for across-the-board reciprocal tariffs starting August 1, 2025.
  • His focus is not just economic—but symbolic, aiming to dismantle alternative alliances that challenge U.S. unipolarity.

IS BRICS REALLY TRYING TO REPLACE US DOLLAR?

No, according to BRICS members:

  • South Africa's Foreign Ministry: Using local currencies in BRICS trade is not the same as replacing the U.S. dollar.
  • BRICS Rio Declaration (July 2025):
    • Paragraph 50: Encourages further discussion on payment interoperability, but avoids any anti-dollar language.
    • Paragraph 13: Criticizes unilateral trade measures—but does not name the U.S..

Internal Differences:

  • Not all BRICS members are aligned:
    • India and Brazil are pursuing deeper trade ties with the U.S.
    • India is not supportive of a new BRICS currency.
The Rio declaration was deliberately cautious, reflecting the lack of consensus within BRICS on a united economic front.

WHERE DOES INDIA STAND?

India's Strategy: Caution and Balance
Statement Source Position
Dec 2, 2024 MoS Finance Clarified that Russia’s proposal on alternate currency was “only noted”, not adopted
March 2025 EAM S. Jaishankar Asserted that “there is no Indian policy to replace the dollar”
India continues to:
  • Support financial cooperation within BRICS.
  • Avoid direct confrontation with the U.S.
  • Prioritize negotiations for a Free Trade Agreement with the U.S..
CONCLUSION Trump’s attacks on BRICS stem from a desire to protect U.S. economic primacy and disrupt any attempts at forming alternative global economic systems. While BRICS has grown in ambition and membership, its internal divisions and lack of a unified policy on de-dollarisation mean it poses more of a potential threat than an actual one—at least for now. India, as both a BRICS member and a strategic partner of the U.S., will need to navigate this geopolitical fault line with skill, ensuring it retains autonomy while securing strategic benefits from both partnerships.