Why BRICS makes Trump see red

US President Donald Trump’s latest outburst against BRICS comes amid India’s preparations for taking over the bloc’s presidency. The acerbic comments echo his remarks made a few months ago just before the BRICS Summit in Rio.

His earlier rant about the bloc’s anti-Americanism was countered by both Russia and China, which asserted that the group had no animosity towards any country. Yet he has now again spoken out about a perceived threat of de-dollarisation by bloc members, which would have to face hefty US tariffs. This has come along with a claim that American opposition is prompting members to drop out of BRICS.

His tirade has worsened India-US tensions at a time when a meeting between Trump and Prime Minister Narendra Modi could be on the cards at the October 26-28 ASEAN summit in Malaysia. They have not met ever since the US imposed 50 per cent tariffs on India.

Why is Trump so worried and angered by the bloc? The answer lies partly in the need to assure his domestic constituency that the US is still the dominant force in the world. More significantly, the US President seems to be painfully aware of the collective economic might of the grouping that was formed originally by Brazil, Russia, India, China and South Africa (BRICS). The bloc now has 10 members, with another 10 as partner countries.

The group accounts for 30 per cent of the global GDP compared to only 25 per cent for the advanced economies of the G7 in terms of purchasing power parity. The population of the BRICS bloc is also an overwhelming 45 per cent of the world compared to only 10 per cent for the G7 nations.

What should be an even greater concern for the US is the fact that countries are lining up to join the bloc. Egypt, Ethiopia, Iran, the UAE and Indonesia are the new entrants, while another 10 countries attended the Rio summit in July as strategic partners. These nations, which have sought to join the bloc, include Belarus, Cuba, Malaysia, Vietnam and Nigeria. The only country which has formally declined to join after seeking to become a member is Argentina. Saudi Arabia has been sitting on the fence for the past year. Thus, there is little evidence to back Trump’s claim that countries are deserting BRICS.

Trump’s repeated assertions that the bloc is aiming for de-dollarisation are also not precisely correct, though there are definite concerns over the predominance of the dollar in global trade and financial systems. The fact that Western countries were able to effectively block Russia’s financial transactions by withdrawing the SWIFT messaging system has also prompted efforts to develop alternative systems.

The concept of a common BRICS currency was initially mooted by Brazilian President Luiz Inacio Lula da Silva in 2023. The idea was rejected by India, given the difficulty of replacing the dollar as reserve currency. It could also have led to a focus on using China’s yuan as a replacement, which is not a desirable option for Delhi. However, there is continuing discussion over the use of national currencies for carrying on trade. In the case of India and Russia, the rupee-rouble exchange mechanism had been instituted during the Soviet era. It has now been revived with the aim of enabling payments for oil purchases to be made through the rupee route.

Similarly, China has been moving its trade with Russia to the yuan to reduce dependence on Western financial systems. But it would be premature to say that there is a definite move towards de-dollarisation as has been declared by Trump. The fact is that the dollar continues to be the dominant reserve currency. As much as 57 per cent of global currency reserves continue to be denominated in the dollar, though this is a dip from 70 per cent in 2001.

The focus instead is now on digital currencies, with even BRICS members moving towards developing their own systems. The digital rupee of the Reserve Bank of India is still at the pilot stage, but it could be used in future in trade deals with other countries. Yet there is no doubt that other BRICS members are keen to evolve a currency system that could prove to be an alternative to the dollar. The Rio summit saw the unveiling of BRICS Pay, a blockchain-based digital payment system. Studies have also been endorsed for creating a cross-border clearing platform and bilateral currency trade corridors.

India, however, is cold to any suggestion of a common currency or the concept of de-dollarisation, especially as it would likely involve greater reliance on the yuan. Its strategic ties with the US continue to deepen despite the apparent tensions on economic issues, while the relationship with China remains a fraught one. It is also in the unique position of being a member of the Quad along with being a founder member of BRICS. It is thus doing a fine balancing act to ensure that it is able to manage these conflicting ties smoothly.

In the case of the Quad, India was scheduled to host this year’s summit, but differences with the US may lead to it being shifted to 2026. As far as the other Quad members are concerned, strategic ties are on track, with several defence agreements signed recently with Australia, while a security cooperation declaration with Japan was released in August.

As India gets ready to assume the BRICS presidency in January 2026, it is seeking to drive deliberations on areas that will find broad consensus, not controversial issues. It will focus on the voice of the Global South, structural reforms within the bloc, counterterrorism and economic resilience while moving towards people-centric initiatives.

India is bound to face greater assertiveness from fellow BRICS members like Russia, China and Brazil in moving towards de-dollarisation or the creation of an alternative currency. It will take all of New Delhi’s diplomatic skills to navigate these currents. India needs to chart an independent path on economic policies for its own good.