The U.S.' Lopsided Trade Relationship with BRICS Countries
- act4yourfreedom
- Jan 25
- 2 min read
22/01/2025: Like in the case of China, the U.S. is running a trade deficit with BRICS countries overall, meaning it imports more from them than it sells to them:
After having threatened China, U.S. neighbors Canada and Mexico as well as the EU with tariffs, U.S. President Donald Trump extended the same to BRICS countries Monday. Reiterating an earlier statement during a post-inauguration press meeting, Trump said that BRICS countries would see "100 percent tariffs" on their imports to the U.S. if the country bloc should take steps towards de-dollarization and diminishing the U.S. dollar in international trade, for example by means of a new unified currency.
How likely is such a scenario, however? Not very, when taking into account various data points on the topic. Firstly, U.S. trade with BRICS countries is very lopsided, numbers from the UN Comtrade Database show. Like in the case of China, the U.S. is running a trade deficit with BRICS countries overall, meaning it imports more from them than it sells to them. Taking into account retaliatory tariffs that would surely happen with dues of this magnitute, the U.S. and its importers have a lot to lose in terms of a near-total trade breakdown with BRICS. In 2023, the U.S. shipped goods with a value of almost $300 billion to BRICS countries, while buying merchandise worth almost $650 billion, including in major categories like machinery, electronics, home and miscellaneous goods, but also plastics, steel, iron and precious stones. Given Trump's presidential history, lower tariffs might be a possibility however, as U.S. trade deficits are also a known thorn in the president's side.
On the other hand, the de-dollarization of the world economy has not progressed in a significant manner and the dollar is in fact still gaining significance in many (but not all) aspects of global trade. During BRICS summits in 2023 and 2024, de-dollarization was on the agenda repeatedly as BRICS leaders believe that U.S. dollar dominance is bringing too many trade and monetary advantages to the United States. Russian President Vladimir Putin called for it in 2023 and China has been known to push the agenda. Initiatives by BRICS countries to establish a new currency are considered complex and can also be described as in very early stages at best, with India declaring recently it was not in support.
Using BRICS currencies in trans-border trade (an area the dollar is still dominating heavily) is disincentivized due to higher costs, less stability and the fact that most of these currencies are at the moment not eligible for settlements should a party to a payment not deliver. Only small steps away from the dollar have been made here and a strong dollar lets buyers flock towards it, as is the case at the moment. Using currencies other than the dollar in official foreign currency reserves has been a little more successful, with Beijing promoting the Yuan Renminbi here, and international dollar reserves have decreased in recent years - albeit to still more than 58 percent of said reserves.
