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Why is Trump threatening India, and other BRICS nations with 100% tariffs?

by admin January 21, 2025
January 21, 2025
Why is Trump threatening India, and other BRICS nations with 100% tariffs?

US President Donald Trump’s renewed threat of imposing 100% tariffs on BRICS nations is a calculated response to the bloc’s growing efforts to challenge the dominance of the US dollar in global trade.

This move reflects a broader strategy to safeguard American economic interests while pressuring nations like India to align more closely with Washington’s geopolitical and economic priorities.

The BRICS group—comprising Brazil, Russia, India, China, and South Africa—has been exploring alternatives to dollar-dominated trade, with key members like China and Russia advocating for a unified BRICS currency.

Trump’s sharp stance aims to counteract these efforts, which he sees as a direct challenge to US economic hegemony. Notably, India has distanced itself from active participation in the bloc’s de-dollarisation agenda, choosing instead to focus on insulating domestic trade from geopolitical risks.

Tariffs as leverage

Trump’s proposed tariffs on BRICS countries aim to disrupt the group’s cohesion by exploiting economic interdependencies.

India, for instance, remains a critical trading partner for the US, with bilateral trade valued at over $190 billion in 2023. The threat of 100% tariffs could significantly impact India’s key export sectors, including pharmaceuticals, IT services, and textiles.

For China and Russia, both of which are at the forefront of de-dollarisation, such tariffs would deepen existing trade tensions with the US. The broader implications, however, extend to the entire BRICS bloc, including newer members like the UAE and Iran, which rely heavily on global trade routes underpinned by the dollar.

Trump’s rhetoric also signals his intent to reframe global trade agreements, emphasising the US’s dominance in financial systems. By targeting the BRICS nations, he aims to reinforce the dollar’s centrality and deter other countries from considering alternative payment mechanisms.

India’s balancing act amidst geopolitical shifts

India, the world’s fifth-largest economy, finds itself in a precarious position. While maintaining its longstanding strategic partnership with the US, New Delhi is simultaneously deepening ties within BRICS to leverage economic opportunities and assert its role in the multipolar world order.

The Reserve Bank of India has repeatedly clarified that de-dollarisation is not on the table, with Governor Shaktikanta Das stating that India’s focus remains on de-risking trade. However, Trump’s tariff threats complicate this stance, potentially forcing India to choose between aligning with BRICS on certain issues or maintaining its trade advantages with the US.

Moreover, India’s exports to the US accounted for approximately $78 billion in 2023, with sectors like IT services and engineering goods particularly exposed to tariff risks.

While India’s participation in BRICS provides a platform for addressing global economic disparities, it must tread carefully to avoid undermining its critical trade relationships with Washington.

BRICS expansion and the US response

The inclusion of six new members—Egypt, Ethiopia, Iran, Saudi Arabia, the UAE, and Argentina—has positioned BRICS as a more formidable economic bloc, representing nearly 40% of global GDP. This expansion is partly driven by the desire to challenge US-led financial systems, evidenced by initiatives like interbank cooperation and settlements in local currencies.

Trump’s aggressive tariff rhetoric underscores his administration’s concerns about the bloc’s potential to dilute US influence. By targeting BRICS nations, he aims to discourage further expansion of the bloc’s financial ambitions while reinforcing America’s leadership in international trade policies.

The post Why is Trump threatening India, and other BRICS nations with 100% tariffs? appeared first on Invezz

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