Posted on 04/11/2025 4:08:31 AM PDT by RomanSoldier19
The BRICS group of nations—Brazil, Russia, India, China, and South Africa—has long aimed to challenge Western-controlled financial systems and reduce the world’s reliance on the US dollar. Now, that mission is getting an unexpected push, thanks to new tariff policies introduced by US President Donald Trump.
BRICS Bloc Gains Momentum Amid US Trade Setbacks Trump has declared what he calls “Liberation Day,” a move that marks one of the biggest protectionist trade shifts since the 1930s. These new tariffs target both enemies and allies, and are expected to slow trade, increase prices in the US, and put brakes on global economic growth.
While the US is pulling away from its international trading partners, BRICS is pulling closer. The group is already deepening its economic ties and expanding its influence.
At their October 2024 summit in Kazan, Russia, the bloc welcomed four new members: Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE). In January 2025, Indonesia also joined the coalition. That makes a total of ten full members. Several other countries, such as Turkey and Saudi Arabia, have either shown interest or are in line to join as partner states.
(Excerpt) Read more at msn.com ...
Bkmk
I was listening to an economist explain world trade. He said that the differential trade between the US and other countries left excess dollars in the other countries’ coffers. Those “excess” dollars are the reason they settle their debts in dollars rather than some other currency. If all of the countries have balanced trade with the US, then they won’t have excess dollars to pay their debts. His point was, the US can have balanced trade or it can be the world’s reserve currency. But we can’t have it both ways.
From another economist. Dollars held in cash by another country are the same as an interest free loan for the amount held. There were, at the time I read this, about the same number of dollars held in the world’s reserve as were in circulation in the US domestic economy. If they all flooded back to the US then it would have the effect of doubling the price of everything.
I believe Trump is using tariffs to get concessions and it’s unlikely they’ll end up looking like his bluster says they’ll look. The world’s economy is a hugely complex ecology. Make a massive sudden change that seems, on the surface to be good and we have no idea what lurks in the math that will be harmful. Mao noticed birds ate seeds so he decreed that all birds would be killed. Birds also ate bugs and what followed was a famine that killed millions.
I mention the above to provoke thoughtful conversation, not hysterical, “YOU WRONG!” comments.
BRICS is the imaginary girlfriend down the shore.
I would imagine there is a tariff “laffer curve” where our trade deficits have a sweet spot. As the world’s largest consumer, we are likely to run trade deficits with a large number of countries even with 0 tariffs.
“I would imagine there is a tariff “laffer curve” where our trade deficits have a sweet spot. As the world’s largest consumer, we are likely to run trade deficits with a large number of countries even with 0 tariffs.”
Now THAT is an intelligent, interesting thought. Thank you.
I’ll bet you’re right.
Yeah, I know why Trump’s doing it, and I was surprised to see the really weak bond sales that hit as a result. I think he’s just trying to crush the Chinese markets to make them submit and show Xi who the boss is, but then we lose a lot of products (though a lot of it is TEMU crap).
I think this goes on for another week and then we end up with a 10% tariff on China and reduced tariffs from China.
China has always been bandit capitalists, so they will act illegally until it becomes unprofitable. They’ve done a good job of it since the Clinton years.
The BRICS countries have been working to organize for several years now and I don’t see that they’ve made any progress. It seems to me it would be hard to implement because there would be too many diverse countries trying to work together.
Another interesting insight, sir!
BRICS is at least 15 years old. And you are correct, they have made no progress. China and India working together on a currency? Lol.
That's a very 19th century approach. I can buy dollars with a few mouse clicks. You don't have to trade physical goods to do it. But of course it is affecting FX rates - making USD stronger and thus US imports cheaper and US exports less competitive.
“That’s a very 19th century approach. I can buy dollars with a few mouse clicks. You don’t have to trade physical goods to do it.
The way it works now Country X builds something for, say 90 cents. They sell it for a dollar. They made 11%. If they have to buy dollars it won’t be one for one. The person holding the dollars isn’t a charity. Let’s they charge three percent. So the dollar cost Country X $1.03. That isn’t much if you’re buying a jacket at $103.00. But suppose Country X wants five hundred billion dollars’ worth of oil. Further this premium goes on for decade after decade. The difference isn’t three percent. It’s 1.03-.9 0r .13 cents. Now multiply that by five hundred billion. (I’m working on a manual upright typewriter so I’d break a finger typing all those zeros. Oh, wait, found my abacus.) That’s an extra sixty-five billion dollars. You can bet they’ll quickly find a way not to use dollars.
The thought on the strong dollar is interesting. From the perspective of the American buying a coat that cost, say, $100 with a weak dollar but only $90 with a strong dollar it’s a good deal. From the perspective of an American company trying to sell something into an economy with a weaker currency, it’s a disaster. Recall Trump is accusing China, which has the most controlled currency in the world, of weakening their renminbi. They can do this because it’s not convertible. It is what they say it is. (Yeah, it’s a can of worms trying to explain how that works.) The point is there’s more going on than just tariffs. There’s currency manipulation, rules specific enough to outlaw US products, excessive inspections and wait times causing perishable products to spoil and many more.
The point is, the world using the dollar as its reserve currency is such a bid deal that President *spit* Obama actually tried to set up a basket of currencies that the world could use instead of the dollar. (Treason?) The impact of all those dollars flooding back into America would double the price of everything overnight. He said he did it because of “fairness.” “It just isn’t fair for America to have such an advantage.” I’m astonished he got elected twice.
All trade deficits are bad PERIOD.
It's the FX market, which these days is fully digitized and works 24h and the volume goes into trillions a day. Half of that is USD. Simply because if a company from let's say Cameroon sells some goods to Pakistan, they most likely won't accept a payment in Pakistani Rupees, most likely they will expect payment in USD. They have to pay taxes, pay their workers, buy oil, Intel chips, some machinery from Germany, components from Nigeria etc. Half of that can be done in USD, the other half... unless you need to buy/sell 100 billion at once, there's no problem to sell dollars buying EUR or the local currency. As USD is half of the whole market. It's a matter of liquidity.
Regarding the reserve currency, USD now is at 58% of total, down from 70% in 2000:
https://en.wikipedia.org/wiki/Reserve_currency
That's a huge amount but still less than 25% of US GDP and no one is forcing all those central banks to keep most of their reserves in USD. They can switch to Rupees. Of course they don't do that as, despite many problems, US economy is still huge and quite stable, so USD is accepted globally.
“The point is there's more going on than just tariffs. There's currency manipulation, rules specific enough to outlaw US products, excessive inspections and wait times causing perishable products to spoil and many more.”
Definitely. In case of China the main problem is that they built their economy largely stealing foreign technologies and they keep doing so, including government operated hacker attacks etc. Let's say American or German company comes up with a new generation PV panels. They are expensive as the R&D process took a lot of time and money. 6 months later Chinese sell the same stuff at half the price. If a Canadian company did it, you just report this case to Canadian institutions, they will likely handle it on their own and if not, it's a matter of pushing them a bit. The Chinese at this point are too big to care.
Trump is playing a dangerous game. But the alternative is to let the red fascists dominate the world.
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