The BRICS grouping is going from strength to strength—Trump’s tariff threats are not expected to deter aspiring members

On October 24, 2024, at the 16th BRICS leaders’ meeting in Kazan, Russia, the leaders and their families took a photo.

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President-elect Donald Trump's pledge to impose 100% tariffs on BRICS countries if they continue to weaken the dollar will not curb the group's expansion, analysts told CNBC.

Most recently, Brazil announced last Monday that Indonesia had joined the group.

Washington has been relatively dismissive of the 10-nation alliance under outgoing President Joe Biden's administration, with White House national security communications adviser John Kirby saying at a news conference in October that the United States did not view Kim as BRIC countries - an economic alliance of emerging markets - as a "threat". Sentiment could change once Trump wins the White House later this month after signs he could impose tariffs on alliance members if they upend the dollar.

"A key policy shift for the incoming Trump administration will be to explicitly treat the BRICS as one entity," Mihaela Pappas, research director at MIT's Center for International Studies, told CNBC via email.

China to ease tariff pain

Led by Beijing, the BRICS was originally formed in 2009 by Brazil, Russia, India and China and joined by South Africa in 2010, aiming to become a force to counter Western dominance on the international stage.

Egypt, Ethiopia, Iran and the United Arab Emirates officially joined the alliance at its 16th annual summit in Kazan. According to Russian officials and official documents from the Central Committee of the Communist Party of China, more than 30 countries have expressed interest in joining the alliance in 2024. CNBC could not independently verify this estimate.

Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics, said it was increasingly unlikely that the U.S. would impose 100% punitive tariffs on the BRICs given their size. Wrigley told CNBC via email that doing so could cause countries that have remained neutral in the U.S.-China competition to turn toward Beijing and interfere with U.S. interests.

David Rubin, a senior fellow at Britain's Chatham House, said the world's second-largest economy might even step in to ease the pain of any potential U.S. trade measures against the BRICS.

"From Beijing's perspective, establishing China as an alternative pillar of the global order is a vital goal that cannot be achieved without the support of developing countries," Lubin said in emailed comments. "With around 120 countries considering China as their main trading partner, this shouldn't be too difficult."

China has already begun to do so, proposing a zero-tariff policy for the least developed countries that have diplomatic relations with Beijing, based on similar measures against the least developed countries, which took effect in December last year.

dollar is king

Trump's tariff threat is conditional on the BRICS overturning the dollar's status as the world's most widely used trading currency - a potentially difficult task for the BRICS alliance.

Russia has been pushing for de-dollarization to avoid the SWIFT network, the globally recognized standard for banking transactions, and to reduce the impact of U.S. sanctions on Moscow. During talks in Kazan, Vladimir Putin reiterated the use of the dollar as a "weapon" and a "big mistake", The Guardian reported.

One of the group's options for overturning the dollar is to create a unified BRICS currency - a proposal spearheaded by Brazil but which has yet to gain support.

Another possibility is to establish multi-currency trade, which is already happening between several member states: some trade between China and Russia is being conducted through the yuan and ruble. Countries also agreed to continue to strengthen trade through local currencies and expressed support for the idea of ​​independent cross-border payment settlement infrastructure.

Chatham House's Lubin noted that given that financial markets are largely denominated in U.S. dollars, the yuan is "much less useful internationally than the U.S. dollar."

Just a 'talk shop'

The lack of concrete alliance strategies and actions casts doubt on whether the BRICS will be seen as a threat to the United States, with Pantheon Macroeconomics' Wrigley saying the emerging market alliance is currently nothing more than "empty talk."

Cecilia Malmström, a non-resident senior fellow at the Peterson Institute for International Economics, said the EU remains too loose and disorganized to bring about any substantive change and that the 2024 Kazan summit “has no achieve any real concrete results”.

This could insulate BRICS and partner countries from the fallout of a trade war with the United States, which has China as one of its main targets.

MIT's Pappas said that despite Beijing's prominent role in the group, there remains wariness within other members about Beijing's dominance and potential trade imbalances.

"Even if China seeks to exploit its position, caution within member states may remain a limiting factor," she added.

Gustavo Medeiros, head of research at Ashmore Group, told CNBC via email that many BRICS members still maintain friendly relations with the United States as "important trading partners."

"There is no reason to believe that EU member states will automatically face economic or geopolitical risks in the event of a trade war between China and the United States," Medeiros said.