On November 30, 2024, President-elect Donald Trump made a resounding statement on X, declaring that BRICS countries are moving away from the dollar “while we stand by and watch is OVER.” This statement’s timing 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 would “face 100 percent tariffs” whether they intended to replace the dollar with the BRICS currency or any other currency.
Trump’s bold threat comes at a critical point in international economic relations, as many world leaders like Russian president Vladimir Putin have openly criticized the dollar’s role as a “weapon.” Additionally, Trump’s call for 25 percent tariffs on Canada and Mexico and a 10 percent tariff on China calls into question whether this new raft of tariffs can safeguard the dollar’s primacy and the underlying financial hegemony of G7 institutions.
Once a moniker from a Goldman Sachs banker Jim O’Neill’s report from 2001 raising concerns of a coalition of countries that could challenge, if not supplant, the G7 nations, the group has now expanded and rolled out an array of parallel institutions to offer small and middle power countries an alternative to the liberal international order. As of 2024, BRICS countries’ share of global GDP in terms of purchasing power parity (PPP) is 34.9 percent as opposed to the G7’s 30.05 percent, whereas, in 2000, the G7 stood at 43.28 percent, and the BRICS constituted only 21.37 percent.
Trump’s return to the White House has also raised concerns about whether the G7 nations, with an avowedly isolationist leader in Washington, can weather the BRICS bloc. In one of his campaign rallies in battleground Wisconsin as early as September 8, 2024, Trump adamantly condemned the de-dollarization of global trade, stating clearly, “You leave the dollar and you’re not doing business with the United States because we are going to put a 100 percent tariff on your goods.” This threat explains why BRICS-aligned nations have been seeking to build alternatives to the dollar for the last sixteen years. In fact, during Trump’s first administration, Chinese State Councilor Yang Jiechi observed in November 2017 how it has become “increasingly difficult for Western governance concepts, systems, and models to keep up with the new international situation,” arguing further that Western-led global governance has “malfunctioned” and reached a point “beyond redemption.”
It is no surprise, then, that BRICS was established in 2009, immediately after the 2008 global financial crisis. According to a report from the Boston Consulting Group, trade among BRICS economies has outpaced trade between BRICS and G7 nations. Representing half of the world’s population and between a quarter and a third of the global economy, the group of nine countries has a fourfold purpose: (1) create an alternative financial system to the Western one, (2) better coordinate economic policy, (3) seek greater representation in global governance, and (4) reduce reliance on the U.S. dollar.
While the strategic discourse laid out by analysts attempts 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 power transition theory. Coined in 1958 by University of Michigan political scientist A.F.K. Organski, power transition theory explains how the prevailing hegemon in the international system finds itself in danger of systemic war as a rising challenger catches up with or overtakes a declining hegemon. Organski explains how the aggressor originates from a small group of dissatisfied, strong countries, where the weaker, rather than the stronger power, is most likely to be the aggressor. Applied to the BRICS countries, this explains how Russia and China can alternate in leading the charge of leveraging geography, population, and economic heft to propose a new set of international organizations bent on replacing G7-led Western institutions.
In pursuit of the alternative financial system goal, the BRICS countries, through the economic heft of China, have created the New Development Bank (NDB), Asian Infrastructure Investment Bank (AIIB), and Contingent Reserve Arrangement (CRA) in order to challenge the prominence of the International Monetary Fund (IMF) and the World Bank (WB). Professors Saori Katada, Cynthia Roberts, and Leslie Elliott Armijo argue in their book, BRICS and Collective Financial Statecraft, how this unique club of rising powers has united over their shared interest in “global revisionism” through military and financial power resources to impact international outcomes through club theory.
Professors Deborah Larson and Alexei Shevchenko, in their book The Quest for Status: Chinese and Russian Foreign Policy, explain how social psychology explains the need for these two rising powers to seek preeminence in a new area to enhance their realization of great power status. With these new multilateral institutions, spearheading the creation of these alternative institutions reflects their increased power and status, motivated by their frustration of not receiving recognition commensurate with China’s power and rise.
However, skeptics of the BRICS and the China-Russia axis’s stewardship of an alternative global financial system are quick to point out the vast disparities in economic capacities between the BRICS countries and the prevailing G7 institutions. Professor of Economics and Political Science at UC Berkeley, Barry Eichengreen, lays out these limitations by listing how the Chinese renminbi accounts for less than 6 percent of trade settlements, Chinese banks manage only 3 percent of daily transactions by value of U.S.-based clearinghouses, and Beijing’s ability to provide liquidity, privacy and data-protection laws remain murky.
Within the BRICS, security and geopolitical faultlines between member states also raise doubt over whether this forum can be conducive to any sort of cooperation. For instance, China and India have treaded carefully since the 2020 Galwan border clash, which led to the death of twenty Indian and four Chinese soldiers. The aftermath of this episode of border conflict along the Sino-Indian border has led to New Delhi deepening ties with the United States, as evident in Indian prime minister Narendra Modi’s 2023 state visit to Washington, resulting in the largest U.S.-Indian defense cooperation deals. The DoD confirmed that twenty years ago, there was no defense cooperation at all, whereas, as of 2023, the two countries are “co-producing and co-developing major systems together.”
Additionally, the recent inclusion of Middle Eastern states like Iran, Egypt, and the UAE after the 2023 BRICS Summit raises questions about BRICS cohesion, given the regional rivalry such a big tent would now inherit. Saudi Arabia’s recent inclusion also draws doubt, given its ongoing endemic security rivalry with Iran. Riyadh made this point clear during the 2024 BRICS Summit in Kazan, where the Saudi foreign minister only attended the last day, making clear that it is hedging its commitment to a club it perceives as a hedging club for middle powers.
While the BRICS members have clear attributes, such as their status as non-Western states, the security rivalries they carry may and have proven to stand as impediments to becoming a fully-fledged treaty-bound organization with any semblance of a security commitment. Commentators are quick to couple the relative lack in economic heft to U.S.-led organizations in addition to this big tent of geopolitical rivals, which has shown serious flaws, particularly with the India-China and Iran-Saudi rivalries as well as its framing as an anti-Western coalition.
There is no clear formula for what makes an ideal BRICS member, just as no clear path exists for these member states to chart any form of coordination. Negative assessments of the BRICS as a paper tiger or house of cards 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 in place or carry as much economic clout. While some players like New Delhi, Brasilia, and Ankara are hedging against uncertainties to garner more negotiating 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 helm of the G7 bloc doesn’t immediately signal any tightening of alignment within BRICS. Still, it can potentially accelerate common causes over concerns like climate cooperation and financial statecraft in the interests of member states already under heavy sanctions.
Rimon Tanvir Hossain is a Research Assistant with the Middle East Institute’s Program on Strategic Technologies and Cybersecurity. He received his M.P.P. from the UCLA Luskin School of Public Affairs and his B.A. from UC Berkeley. He is an MPhil/PhD Candidate at the Pardee RAND Graduate School and an Assistant Policy Researcher at the RAND Corporation. Previously, Rimon served as a congressional staffer for the Office of U.S. Senator Alex Padilla, where he led the State Department portfolio as a Constituent Services Representative.
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