Recent statements by US President Donald Trump have heightened trade tensions between the USA and the BRICS economic bloc. Concerned about the potential for BRICS to abandon the dollar in international trade, Trump threatened 100% tariffs.
Tensions between the USA and BRICS
BRICS, which includes Brazil, Russia, India, China, and South Africa, has recently expanded to include new participants such as Egypt, Ethiopia, Indonesia, Iran, and the UAE. These nations are considering alternatives to the dollar for international trade. In response, President Trump declared that he will not allow BRICS to replace the dollar and threatened trade sanctions.
Trump's Trade Strategies and BRICS Challenges
Trump is reverting to his previous economic strategies, including tariffs to protect American manufacturing. At the BRICS summit, the Russian president urged reducing dollar usage and boosting transactions in national currencies. However, creating a single currency for BRICS countries poses challenges, as common currency thoughts require giving up individual currencies and establishing a central bank. Economic differences among BRICS countries complicate the creation of a monetary union.
Tariff Policy on Mexico and Canada
Trump also announced a 25% tariff on imports from Mexico and Canada starting February 1. He attributes these measures to illegal immigration from Mexico and the flow of drugs from Canada. In response, Mexico and Canada are considering retaliatory tariffs, which could threaten a trade war.
The new US tariff policy towards BRICS and North American neighbors could lead to increased international tension. Questions remain about whether BRICS countries can create an effective alternative to the dollar and what the response to US trade policy will be.
