A week into his presidency, U.S. President Donald Trump has reaffirmed his stance on imposing tariffs on BRICS nations—Brazil, Russia, India, China, and South Africa—along with other newly added members. This warning was echoed in a recent post on his social media platform, Truth Social. Trump first made similar remarks shortly after winning the 2024 U.S. presidential elections.
“The idea that the BRICS countries are trying to move away from the dollar, while we stand by and watch, is OVER,” Trump declared on Thursday. He emphasized that a commitment from these nations is essential, stating they must not create a new BRICS currency or back any alternative currency to the U.S. dollar. Failure to comply would result in a hefty 100% tariff, effectively shutting them out of the lucrative U.S. market.
In recent years, BRICS has emerged as a formidable economic coalition, with two of its member states ranking among the world’s five largest economies. The group has expanded significantly with the addition of countries like Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates, enhancing its global influence.
BRICS and the U.S. Dollar
Formed in 2009, BRICS was established with the objective of countering the dominance of the U.S. and its Western allies. Over the years, the economies of its member nations have surged, representing nearly half of the world’s population and positioning BRICS as a counterpart to the G7.
The bloc has frequently discussed the potential introduction of an alternative reserve currency, a notion that gained traction following Western sanctions on Russia after its military actions in Ukraine in 2022. However, skepticism remains regarding this ambition, as the U.S. dollar continues to solidify its status as the world’s primary reserve currency, with substantial global reliance on it.
India’s Strategic Approach
Amid these dynamics, India has been working to reduce its dependence on the U.S. dollar, striving to promote the Indian rupee in international trade. Following sanctions on Russia in 2022, the Reserve Bank of India (RBI) permitted invoicing and payments in rupees for international transactions.
During a recent address in Kazan, Prime Minister Narendra Modi highlighted India’s commitment to enhancing financial integration among BRICS nations, advocating for trade in local currencies and streamlined cross-border payments to bolster economic cooperation.
In November 2024, External Affairs Minister S. Jaishankar underscored the significance of mutual trade settlements in national currencies, particularly in the current geopolitical climate. However, India is also keen on maintaining robust ties with the Trump administration to mitigate the impact of potential tariffs.
