Ethiopia: Navigating the U.S. President-Elect's Tariff Threats - Implications for Brics+ and Strategic Responses

4 December 2024
The Ethiopian Herald (Addis Ababa)

BRICS+

The BRICS+ initiative, an expansion of the original BRICS group, represents a strategic effort by non-Western nations to establish a more balanced global order by including additional emerging economies. This expansion offers new members access to investment and financing through the New Development Bank (NDB), enhanced trade opportunities, and avenues for technology and knowledge transfer, driving economic growth and innovation (Brookings Institution, 2024).

Politically, BRICS+ strengthens global influence and diplomatic ties among member nations, fostering coordinated stances on international issues while promoting economic diversification to reduce dependency on Western markets. Furthermore, by challenging Western dominance and advocating alternative governance models, BRICS+ aims to contribute to a multipolar world order, enhancing stability, security, and equitable global power distribution (World Economic Forum, 2024).

The Challenge

BRICS faces challenges to unified action due to its members' economic dependence on Western trade, investment, and aid, which complicates adopting collective stances (UNCTAD, 2024). Geopolitical differences and varying economic policies among members further hinder consensus building on global issues. Additionally, the group's institutional capacity is tested by the need for effective coordination mechanisms to align its members' diverse priorities and strategies (Brookings Institution, 2024).

The Threat

The BRICS+ initiative is a strategic effort to challenge the dominance of Western-led global economic structures and establish a multipolar world order. However, the proposed 100% tariffs by U.S. President-elect Donald Trump on BRICS nations highlight the significant resistance such initiatives face. These threats aim to deter BRICS from creating an alternative to the U.S. Dollar as the global reserve currency, representing a broader strategy to maintain the Dollar's supremacy in international trade (Politico, 2024). In this context, BRICS+ must adopt a cohesive and strategic approach to navigate this geopolitical challenge.

The Impacts

The proposed 100% tariff on BRICS+ nations by the U.S. president-elect could backfire economically in the short and long term. While aimed at deterring BRICS+ initiatives, such as reducing reliance on the U.S. Dollar, the tariffs risk inflating consumer prices in the U.S. as critical suppliers like China, India, and Brazil face higher business costs (Business Insider, 2024). American companies, dependent on global supply chains could see operational costs rise, eroding competitiveness.

Moreover, reciprocal tariffs by BRICS+ nations on U.S. exports could harm sectors like agriculture, manufacturing, and technology, reducing demand and exacerbating trade deficits. The interconnected nature of global supply chains further amplifies the risk of disruptions, potentially driving BRICS+ nations to strengthen partnerships outside the U.S. and undermining American influence in international trade (The Australian, 2024).

The Repercussion

The U.S. tariff threat may drive BRICS+ and other nations to accelerate financial systems independent of the Dollar, potentially weakening its global dominance. Nations like Russia and China are already advocating alternatives, while BRICS+ expansion to include emerging economies like Egypt, UAE, and Iran could boost intra-bloc trade in non-dollar currencies (Politico, 2024). This shift could deepen BRICS+ cooperation and attract middle powers, eroding U.S. influence in global trade and finance.

Reciprocal tariffs by BRICS+ nations could harm the U.S. economy by restricting market access for key exports like agriculture, technology, and energy, exacerbating trade deficits. Such measures might also drive BRICS+ countries to deepen trade ties with non-U.S. partners, isolating the U.S. from key growth markets (Business Insider, 2024). Additionally, retaliatory tariffs could contribute to global economic instability, discouraging investment and slowing economic growth, with the U.S. also facing repercussions as a significant international market player (The Australian, 2024).

Response by BRICS+

BRICS+ should respond to U.S. tariff threats by strengthening internal economic integration through enhanced trade agreements and New Development Bank (NDB) financing, reducing reliance on Western systems (UNCTAD, 2024). Strategic diplomacy with emerging economies and the Global South can amplify collective bargaining power and attract new members. To ensure cohesive responses, BRICS+ must align member priorities and develop shared policies while advancing alternative financial mechanisms, such as a BRICS reserve currency, to reduce dollar dependence (Brookings Institution, 2024). Public diplomacy, highlighting the benefits of a multipolar trade system, can garner international support and counter-economic coercion (World Economic Forum, 2024).

Conclusion

The U.S. president-elect proposed 100% tariffs on BRICS+ nations, posing a significant challenge to the bloc's efforts to reduce reliance on the U.S. Dollar and advance a multipolar global order. However, these threats could unify BRICS+ and accelerate its strategic initiatives. The bloc can reduce Western dependency by enhancing internal economic integration through trade frameworks and New Development Bank financing, fostering strategic diplomacy with the Global South, and advancing alternative financial mechanisms like a BRICS reserve currency. Public diplomacy and cohesive policy alignment further strengthen BRICS+'s resilience, enabling it to counter coercive measures, promote equitable governance, and challenge Western-led economic dominance.

Editor's Note: The views entertained in this article do not necessarily reflect the stance of The Ethiopian Herald

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