Trump Vs BRICS

In the months to come, the world economies would be engaged in ‘tariff war’, initiated by US President Donald Trump. Who gets the upper hand is anybody’s guess. With his call of making ‘America great again’, Trump has taken a stand to ensure that the American dollar is not weakened by various blocs that have emerged globally. Primarily, being the BRICS.

What is BRICS?

BRICS, comprising Brazil, Russia, India, China and South Asia, is a bloc of emerging markets/countries. It was formed as an informal diplomatic club in 2009; now it has grown to 10 countries such as Egypt, Ethiopia, Indonesia and Iran. United Arab Emirates (UAE) is yet to confirm its membership status, while a dozen more nations are hoping to join the bloc. The fact that it is considered as an alternative to the all too powerful G7 nations has drawn US’s ire. All put together, BRICS stands for more than half of the world’s population and a quarter of the world economy.

Positioning of BRICS

Trump is wary of BRICS, who he believes is trying to hurt the American economy and consequently the dollar. Experts believe that the BRICS has been formed to challenge the global order. Its endeavour to promote local currencies vis a vis dollar in trade is seen as an attempt to “weaken the dollar.” However, the group’s reasoning is that the dependence on dollar needs to be reduced, especially with the threat of tariffs now looming over their economies. Therefore, Russia and China are working out the energy trade deals in their local currencies — rubles and yuan respectively. For instance, India has made use of dirham, rubles, yuan to pay for oil procured from Russia.

Where’s the hitch?

The BRICS grouping has plans to introduce a common currency, currently referred to as ‘Unit.’ It is said to be backed by gold. It has also introduced an alternative banking system – the New Development Bank (NDB), seen as a possible rival to World Bank. But the hitch lies in the regional one-upmanship between India and China. Both strive to be dominant in the group, often resulting in stalled proposals. For instance, India has put a spanner in the plans of launching ‘Unit’ as it fears China’s yuan will get a head start. India’s measures are also seen as trying to soften the Western nations’ anger.

As far as the NDB’s operations is concerned, it is not yet as big as World Bank. It has approved $39 billion in loans versus the World Bank’s $1 trillion plus. As per the BRICS website, out of the roughly $33 trillion (€28 trillion) in global trade conducted in 2024, intra-BRICS trade made up just 3%, or around $1 trillion. The new payment system such as BRICS Pay and BRICS Bridge is still being formalised.

What works, what doesn’t

More nations are keen on joining the BRICS bloc to ensure that the world order is less dominated by the powerful Western nations. They seek a representation on the global stage, and therefore BRICS seems as a practical choice. Yet, one cannot ignore the fact that the majority of global trade is conducted via conventional currencies, with dollar still ahead. Experts opine that currencies like ruble are “volatile.” Besides, the threat of tariffs on BRICS bloc has created fear amongst the countries. Also, the rivalry between India and China creates roadblock in the growth of BRICS. Experts say that the group needs a clear vision and the will to translate the vision into action. It also has to be cohesive to bridge differences amongst the nations. The dominance of dollar, for now, seems unchallenged.

Impact on India

As per the trade reports, the US trade tariffs will hurt China, Canada and Mexico more than India. The Trade Watch Quarterly report for Q3 FY 2025-26, released by NITI Aayog, shows that under the present US tariff structure, India is likely to do well in 22 of the top 30 Harmonized System-2 (HS-2) product categories it exports to the US. The HS-2 refers to broad product categories referred to in international trade classification.

These 22 categories account for 61 percent of India’s total exports to North America and correspond to 68 percent of total US imports. When it comes to the remaining categories, where India faces slightly higher tariffs, the average disadvantage is limited to just 1 percent. Thus, overall India remains competitive in those areas as well.

The report points out that the labour driven and high value sectors such as garments, textiles and electronics, vehicles, pharmaceuticals will do well in the North American market.

However, the currently perceived advantage might be affected if the US goes ahead with levying tariffs at the end of its August 1 deadline. If the trade agreement between India and USA does not take place by then, the Washington might re-levy the 26 per cent, including the 10 per cent base tariff, which is in abeyance for now. Taking all these factors in account, the Niti Ayog report suggests a flexible trade approach.

Exim relations

The data released by the Union Ministry of Commerce & Industry for FY 2025-26 (April to June) says that the US has emerged as the leading export destination for India. India’s exports grew by 22.18 percent in April–June 2025 compared to corresponding period in 2024, with a sharp 23.53 percent year-on-year rise recorded in June 2025 alone. India’s overall exports—comprising merchandise and services—stood at US$210.31 billion, reflecting a 5.94 percent year-on-year increase from US$198.52 billion in Q1 FY 2024–25. Merchandise exports alone reached US$112.17 billion, up 1.92 percent from 2024.

When it comes to imports, the US also featured among India’s top five sources. Imports from the US rose by 11.68 percent during April–June 2025 compared to the corresponding period in 2024. Overall, the Q1 trade data reflects the US’s central role in India’s external trade strategy.