The Fate Of The BRICS Under A Second Donald Trump Administration

On November 30, 2024, President-elect Donald Trump made a resounding statement at X, declaring that the BRICS countries are moving away from the dollar “while we stand by and watch it’s DONE”. The timing of this statement not only came a month after dignitaries from thirty-six countries and six international organizations attended the sixteenth BRICS summit held in Kazan, Russia, but also doubled down that countries “will face 100 percent tariffs” whether they intend to replace the dollar BRICS currency or any other currency.

Trump’s bold threat comes at a critical juncture in international economic relations, as many world leaders such as Russian President Vladimir Putin have openly criticized the role of the dollar as “weapon.” Additionally, Trump’s call for 25 percent of customs duty to Canada and Mexico and a 10 percent tariff on China calls into question can this new set of tariffs protect dollar primacy and the underlying financial hegemony of the G7 institutions.

Once the nickname of Goldman Sachs banker Jim O’Neill report raising concerns since 2001 about a coalition of countries that could challenge, if not supplant, the G7 nations, the group has now expanded and spawned a series of parallel institutions to offer small and medium-power countries an alternative to the liberal international order. From 2024, BRICS countries share in global GDP in terms of purchasing power parity (PPP) it is 34.9 percent in contrast to the G7’s 30.05 percent, while in 2000 the G7 was 43.28 percent and BRICS accounted for only 21.37 percent.

There is also Trump’s return to the White House caused concern about whether the G7 countries, with an openly isolationist leader in Washington, can withstand the BRICS bloc. At one of his campaign rallies on the battlefield in Wisconsin, as early as September 8, 2024, Trump resolutely condemned the de-dollarization of global trade, clearly stating“Leave the dollar and do not do business with the United States because we will put a 100 percent tariff on your goods.” This threat explains why the BRICS countries have sought to create alternatives to the dollar for the past sixteen years. In fact, during Trump’s first administration, Chinese State Councilor Yang Jiechi observed in November 2017 as it became “increasingly difficult for Western governance concepts, systems and models to keep pace with the new international situation”, further arguing that Western-led global governance was “broken” and had reached a point “beyond redemption”.

Therefore, it is not surprising that BRICS was founded in 2009, right after the global financial crisis of 2008. According to a report from the Boston Consulting Group, trade among BRICS economies has surpassed trade between BRICS and the G7 countries. Representing half the world’s population and between a quarter and a third of the global economy, the group of nine countries has fourfold purpose: (1) create an alternative financial system to the West, (2) better coordinate economic policy, (3) seek greater representation in global governance and (4) reduce reliance on the US dollar.

While the strategic discourse set by analysts tries to provide threat assessments from Western capitals, Western academics in the field of international relations have better constructed a framework to explain this unique phenomenon through the theory of the transition of power. It was devised in 1958 by a political scientist from the University of Michigan AFK organicpower transition theory explains how the prevailing hegemon in the international system finds itself at risk of systemic war as a rising challenger catches up with or overtakes a declining hegemon. Organically, he explains that the aggressor originates from a small group of dissatisfied, strong countries, where a weaker, not a stronger, power is most likely to be the aggressor. Applied to the BRICS countries, this explains how Russia and China can take turns in leading the charge, leveraging geography, population and economic weight to propose a new set of international organizations seeking to replace Western institutions led by the G7.

In pursuit of the goal of an alternative financial system, the BRICS country, through the economic weight of China, created the New Development Bank (NDB), the Asian Infrastructure Investment Bank (AIIB) and the Contingent Reserve Agreement (CRA) to challenge the prominence of the International Monetary Fund. fund (IMF) and the World Bank. Professors Saori Katada, Cynthia Roberts and Leslie Elliott Armijo argue in their book, BRICS and collective financial statehoodhow this unique club of rising powers united around a common interest in “global revisionism” through military and financial power resources to influence international outcomes through club theory.

Professors Deborah Larson and Alexei Shevchenko, in their book The Quest for Status: Chinese and Russian Foreign Policyexplain how social psychology explains the need for these two rising powers to seek dominance in a new area to enhance their realization of great power status. In addition to these new multilateral institutions, the leadership in the creation of these alternative institutions reflects their increased power and status, motivated by their frustration at not being recognized commensurate with China’s power and rise.

However, skeptics of BRICS and the Sino-Russian axis’ governance of an alternative global financial system are quick to point to the vast differences in economic capacity between the BRICS countries and the prevailing G7 institutions. Professor of Economics and Political Science at UC Berkeley, Barry Eichengreen, sets these limits citing that China’s renminbi accounts for less than 6 percent of trade settlements, Chinese banks handle just 3 percent of daily transactions by value of U.S.-based clearing houses, and Beijing’s ability to ensure liquidity, privacy and data protection laws remain unclear.

Within BRICS security and geopolitical fault lines between member states also raise doubts about whether this forum can be conducive to any kind of cooperation. For example, China and India have acted cautiously since Galwan Border Clash 2020which led to the death of twenty Indian and four Chinese soldiers. The fallout from this episode of border conflict along the Sino-Indian border has led to deepening of New Delhi’s ties with the United States, as apparently the Indian Prime Minister Narendra Modi State Visit 2023 to Washington, which resulted the largest US-India defense cooperation agreements. The Ministry of Defense confirmed that twenty years ago there was no defense cooperation, while from 2023, the two countries “jointly produce and jointly develop large systems”.

In addition, the recent inclusion of Middle Eastern states such as Iran, Egypt and the UAE after the 2023 BRICS summit. asks questions on BRICS cohesion, given the regional rivalry that such a big tent would now inherit. The recent inclusion of Saudi Arabia also raises doubts, given its ongoing endemic security rivalry with Iran. Riyadh made this clear during the 2024 BRICS summit in Kazan, where the Saudi foreign minister attended on just the last day, making it clear that it is guarding its commitment to a club it sees as hedging club for medium forces.

Although BRICS members have clear attributes, such as their status as non-Western states, the security rivalries they carry can and have proven to be an obstacle to becoming a full-fledged treaty-bound organization with any semblance of a security obligation. Commentators are quick to conflate the relative lack of economic strength with the US-led organizations alongside this big tent of geopolitical rivals, which has shown serious flaws, particularly with the India-China and Iran-Saudi rivalries, as well as its own formed as an anti-Western coalition.

There is no clear formula for what constitutes an ideal BRICS member, just as there is no clear path for these member states to chart any form of coordination. Negative ratings of BRICS as paper tiger or house of cards they are still as common in 2024 as they were in the early 2000s and 2010s when the group did not have its China-led multilateral institutions or wield as much economic influence. While some players like New Delhi, Brasilia and Ankara are shielding themselves from uncertainty to gain more bargaining power with Washington, others argue that new members like Egypt and Ethiopia are simply deepening ties with non-Western members, unlike Russia or Iran. Bringing Trump into the equation at the head of the G7 bloc does not mean an immediate tightening of relations within the BRICS. However, it can potentially accelerate common issues around concerns such as climate cooperation and financial governance in the interests of member states already under heavy sanctions.

Rimon Tanvir Hossain is a research assistant at the program of the Middle East Institute for Strategic Technologies and Cyber ​​Security. He earned his MPP from the UCLA Luskin School of Public Affairs and his BA from UC Berkeley. He is an MPhil/PhD candidate at the Pardee RAND Graduate School and an adjunct policy researcher at the RAND Corporation. Previously, Rimon worked as a congressional staffer in the Office of US Senator Alex Padilla, where he managed the State Department’s portfolio as the Constituent Service Representative.

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