Paper: GS – II, Subject: International Relations, Topic: India’s Foreign Policy, Issue: US Threats on BRICS Nations.
Context:
The BRICS (Brazil, Russia, India, China, and South Africa) coalition has recently become a target for U.S. President Donald Trump due to its growing influence and the potential implications of its policies on the U.S. dollar and global economics.
Key Takeaways:
Trump’s Threat and BRICS’s Response:
- In a recent social media post, former US President Donald Trump threatened to impose an additional 10% tariff on any country aligning itself with the “anti-American policies” of BRICS (Brazil, Russia, India, China, and South Africa), now expanded to include Egypt, Ethiopia, Iran, Saudi Arabia, the UAE, and Indonesia.
- He had previously threatened a 100% tariff if BRICS nations even considered reducing the use of the dollar in global trade.
- This threat stems from a growing trend among countries to reduce their reliance on the US dollar and the US-led global financial system, particularly after the US weaponized the global financial infrastructure by excluding Iran (in 2012) and Russia (in 2022) from SWIFT (Society for Worldwide Interbank Financial Telecommunication).
- Russia and China have notably begun trading in their domestic currencies.
Impact of De-Dollarization and US Threats on India:
Conclusion:
- Trump’s targeting of BRICS reflects concerns about the group’s growing economic influence and its efforts to reduce dependence on the US dollar.
- While India has not actively pursued de-dollarization, it has sought to “de-risk” its trade and explore alternative trade arrangements.
- India must carefully navigate this complex landscape to protect its economic interests and maintain its relationships with key partners.
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