Since President Donald Trump’s inauguration for his second term in January 2025, global markets and policymakers have been on edge due to his aggressive tariff policies and trade rhetoric. Trump’s campaign promises and subsequent actions suggest a potential escalation into a new trade war, with significant implications for the United States and its trading partners, particularly the BRICS nations (Brazil, Russia, India, China, South Africa, and newer members like Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia, and the United Arab Emirates).
Is Trump Poised to Start a New Trade War?
Trump’s Tariff Actions and Rhetoric
Since taking office on January 20, 2025, President Trump has implemented and threatened a series of tariffs that have rattled global markets. Key actions include:
-
February 1, 2025: Trump imposed 25% tariffs on imports from Mexico and most Canadian goods, alongside a 10% tariff on Chinese imports, citing issues like fentanyl smuggling and illegal immigration.
-
March 6, 2025: A temporary exemption was granted for Canada and Mexico under the USMCA for one month.
-
April 2, 2025: Trump announced a universal 10% tariff on all imports, with higher rates for specific countries (e.g., 54% on China, 20% on the EU, 25% on South Korea, and 24% on Japan). These were briefly paused for 90 days on April 9 due to market turmoil but retained the 10% baseline.
-
June 3, 2025: Tariffs on imported steel and aluminum were raised to 50% from 25%.
-
July 6, 2025: Trump threatened an additional 10% tariff on countries aligning with the “anti-American policies” of BRICS, effective August 1, 2025, without specifying what constitutes alignment.
These actions mark a significant departure from historical U.S. trade policy, where Congress traditionally shaped tariff strategies over decades. Trump’s unilateral approach, leveraging executive authority, has been described as a “big break with history” by economic historian Douglas Irwin. The scale and speed of these tariffs, affecting over $2 trillion in imports (roughly two-thirds of U.S. imports), suggest a broader and more disruptive trade conflict compared to Trump’s first-term trade war with China, which targeted $380 billion in imports.
Historical Context and First-Term Trade War
During Trump’s first term (2017–2021), his trade war with China involved tariffs averaging 20% on 60% of China-U.S. trade, prompting retaliatory tariffs from Beijing. While these measures reduced the U.S. trade deficit with China (from 21% of total U.S. imports in 2016 to 13% in 2024), they also increased consumer prices and failed to significantly boost U.S. manufacturing jobs. The current strategy expands this approach globally, targeting not only adversaries but also allies like Canada, Mexico, and the EU, raising concerns about a full-scale global trade war.
Economic and Geopolitical Goals
Trump’s stated objectives include:
-
Reducing Trade Deficits: He argues tariffs will level the playing field by encouraging domestic production and reducing reliance on imports.
-
Protecting American Jobs: Trump and supporters like the United Auto Workers claim tariffs protect manufacturing and agricultural jobs.
-
Non-Economic Goals: Tariffs are also being used to address issues like illegal immigration and fentanyl smuggling, particularly with Mexico and China.
-
Preserving Dollar Dominance: Trump has repeatedly threatened 100% tariffs on BRICS nations to deter de-dollarization efforts, emphasizing the U.S. dollar’s role as the global reserve currency.
However, critics argue these policies are misguided. Economic studies suggest that Trump’s first-term tariffs cost U.S. consumers more than they gained, with no net job growth due to retaliatory tariffs. The current tariffs, projected to increase household costs by $1,200–$3,900 annually, could fuel inflation and disrupt supply chains.
Trump’s Stance on BRICS
Trump’s rhetoric suggests a perception of BRICS as a challenge to U.S. economic dominance, particularly due to their discussions on de-dollarization and alternative payment systems. In a January 30, 2025, Truth Social post, he warned BRICS nations against creating a new currency or backing alternatives to the U.S. dollar, threatening 100% tariffs. On July 6, 2025, he announced an additional 10% tariff on countries aligning with BRICS’ “anti-American policies,” though he did not clarify what these policies entail.
The BRICS summit in Rio de Janeiro (July 6–7, 2025) issued a statement criticizing unilateral tariffs as disruptive to global trade, without directly naming the U.S. This prompted Trump’s tariff threat, interpreted by analysts like Stephen Olson as a response to BRICS’ push for a less U.S.-centric global financial order. However, BRICS is not a monolithic bloc; its members have diverse interests, and their economic cohesion is limited, with some describing it as a “photo-opportunity” rather than a unified force.
BRICS as Economic Competitors, Not Enemies
While Trump’s rhetoric frames BRICS as antagonistic, the reality is more nuanced. The bloc, representing 54.6% of the global population and 42.2% of global GDP (PPP), is a significant economic force. Its expansion to include nations like Indonesia and Nigeria in 2025 underscores its growing influence. However:
-
Economic Diversity: BRICS members like India and Brazil maintain strong trade ties with the U.S., and leaders like Narendra Modi leverage personal relationships with Trump to mitigate tariff impacts.
-
No Unified Currency Threat: Despite discussions, BRICS has no immediate plan to replace the U.S. dollar, which remains the dominant reserve currency (over 50% of global reserves).
-
Geopolitical Tensions: Countries like Russia and China are strategic rivals, but others, like Brazil and South Africa, are not. Trump’s blanket threats risk alienating potential allies.
Thus, while Trump may view BRICS’ de-dollarization talks as a threat, labeling them as “enemies” oversimplifies complex economic relationships. His tariffs appear more as a coercive tool to maintain U.S. leverage than a declaration of enmity.
Reasons for American Anxiety
Trump’s tariff policies have sparked widespread anxiety among Americans, driven by economic, social, and geopolitical concerns:
1. Economic Impacts
-
Rising Consumer Prices: Economists warn that tariffs will increase costs for imported goods, from electronics to food, with estimates suggesting an additional $1,200–$3,900 per household annually.
-
March 6, 2025: A temporary exemption was granted for Canada and Mexico under the USMCA for one month.
-
April 2, 2025: Trump announced a universal 10% tariff on all imports, with higher rates for specific countries (e.g., 54% on China, 20% on the EU, 25% on South Korea, and 24% on Japan). These were briefly paused for 90 days on April 9 due to market turmoil but retained the 10% baseline.
-
June 3, 2025: Tariffs on imported steel and aluminum were raised to 50% from 25%.
-
July 6, 2025: Trump threatened an additional 10% tariff on countries aligning with the “anti-American policies” of BRICS, effective August 1, 2025, without specifying what constitutes alignment.
These actions mark a significant departure from historical U.S. trade policy, where Congress traditionally shaped tariff strategies over decades. Trump’s unilateral approach, leveraging executive authority, has been described as a “big break with history” by economic historian Douglas Irwin. The scale and speed of these tariffs, affecting over $2 trillion in imports (roughly two-thirds of U.S. imports), suggest a broader and more disruptive trade conflict compared to Trump’s first-term trade war with China, which targeted $380 billion in imports.
Historical Context and First-Term Trade War
During Trump’s first term (2017–2021), his trade war with China involved tariffs averaging 20% on 60% of China-U.S. trade, prompting retaliatory tariffs from Beijing. While these measures reduced the U.S. trade deficit with China (from 21% of total U.S. imports in 2016 to 13% in 2024), they also increased consumer prices and failed to significantly boost U.S. manufacturing jobs. The current strategy expands this approach globally, targeting not only adversaries but also allies like Canada, Mexico, and the EU, raising concerns about a full-scale global trade war.
Economic and Geopolitical Goals
Trump’s stated objectives include:
-
Reducing Trade Deficits: He argues tariffs will level the playing field by encouraging domestic production and reducing reliance on imports.
-
Protecting American Jobs: Trump and supporters like the United Auto Workers claim tariffs protect manufacturing and agricultural jobs.
-
Non-Economic Goals: Tariffs are also being used to address issues like illegal immigration and fentanyl smuggling, particularly with Mexico and China.
-
Preserving Dollar Dominance: Trump has repeatedly threatened 100% tariffs on BRICS nations to deter de-dollarization efforts, emphasizing the U.S. dollar’s role as the global reserve currency.
However, critics argue these policies are misguided. Economic studies suggest that Trump’s first-term tariffs cost U.S. consumers more than they gained, with no net job growth due to retaliatory tariffs. The current tariffs, projected to increase household costs by $1,200–$3,900 annually, could fuel inflation and disrupt supply chains.
Are BRICS Countries Viewed as Enemies?
Trump’s Stance on BRICS
Trump’s rhetoric suggests a perception of BRICS as a challenge to U.S. economic dominance, particularly due to their discussions on de-dollarization and alternative payment systems. In a January 30, 2025, Truth Social post, he warned BRICS nations against creating a new currency or backing alternatives to the U.S. dollar, threatening 100% tariffs. On July 6, 2025, he announced an additional 10% tariff on countries aligning with BRICS’ “anti-American policies,” though he did not clarify what these policies entail.
The BRICS summit in Rio de Janeiro (July 6–7, 2025) issued a statement criticizing unilateral tariffs as disruptive to global trade, without directly naming the U.S. This prompted Trump’s tariff threat, interpreted by analysts like Stephen Olson as a response to BRICS’ push for a less U.S.-centric global financial order. However, BRICS is not a monolithic bloc; its members have diverse interests, and their economic cohesion is limited, with some describing it as a “photo-opportunity” rather than a unified force.
BRICS as Economic Competitors, Not Enemies
While Trump’s rhetoric frames BRICS as antagonistic, the reality is more nuanced. The bloc, representing 54.6% of the global population and 42.2% of global GDP (PPP), is a significant economic force. Its expansion to include nations like Indonesia and Nigeria in 2025 underscores its growing influence. However:
-
Economic Diversity: BRICS members like India and Brazil maintain strong trade ties with the U.S., and leaders like Narendra Modi leverage personal relationships with Trump to mitigate tariff impacts.
-
No Unified Currency Threat: Despite discussions, BRICS has no immediate plan to replace the U.S. dollar, which remains the dominant reserve currency (over 50% of global reserves).
-
Geopolitical Tensions: Countries like Russia and China are strategic rivals, but others, like Brazil and South Africa, are not. Trump’s blanket threats risk alienating potential allies.
Thus, while Trump may view BRICS’ de-dollarization talks as a threat, labeling them as “enemies” oversimplifies complex economic relationships. His tariffs appear more as a coercive tool to maintain U.S. leverage than a declaration of enmity.
Reasons for American Anxiety
Trump’s tariff policies have sparked widespread anxiety among Americans, driven by economic, social, and geopolitical concerns:
1. Economic Impacts
-
Rising Consumer Prices: Economists warn that tariffs will increase costs for imported goods, from electronics to food, with estimates suggesting an additional $1,200–$3,900 per household annually. Perishable goods and unbranded products are likely to see quicker price hikes.
-
Market Volatility: The S&P 500 dropped 12% after Trump’s April 2 “Liberation Day” announcement, though it rebounded after the 90-day tariff pause. Ongoing uncertainty continues to unsettle investors.
-
Job Losses: While Trump aims to protect manufacturing jobs, retaliatory tariffs have already led to canceled orders for U.S. farmers and layoffs in industries like trucking and retail. For example, Stellantis announced 900 layoffs due to disrupted North American supply chains.
-
Inflation Risks: Tariffs are projected to increase federal revenues by $156.2 billion in 2025 but could raise inflation, with wholesale inflation already showing upward pressure.
2. Geopolitical Concerns
-
Strained Alliances: Tariffs on allies like Canada, Mexico, and the EU risk damaging diplomatic relations and trade agreements like the USMCA, a hallmark of Trump’s first term.
-
Global Isolation: The U.S. reputation as a reliable trade partner is eroding, with foreign investors pulling money out and U.S. bond yields rising, signaling higher borrowing costs.
-
China’s Resilience: Beijing’s retaliatory tariffs (e.g., 34% on U.S. goods) and ability to reroute exports through Southeast Asia suggest it can withstand a prolonged trade war, potentially outlasting U.S. resolve.
3. Social and Political Polarization
-
Economic Inequality: Critics argue that tariffs, coupled with Trump’s proposed $5.3 trillion tax cuts favoring the wealthy, exacerbate inequality, as middle-class families bear the brunt of higher prices.
-
Policy Uncertainty: Trump’s erratic tariff announcements—such as pausing high tariffs after market backlash—create confusion and distrust among businesses and consumers.
-
Public Sentiment: Polls indicate growing concern over inflation and job security, with some Americans supporting tariffs for job protection while others fear economic disruption.
BRICS as a Counterbalance
BRICS nations, representing a significant portion of global economic output, have positioned themselves as a counterweight to Western-dominated institutions like the G7 and IMF. Their push for de-dollarization and alternative trade systems is seen as a response to U.S. economic dominance. However, aligning with BRICS is not the only—or necessarily the best—way to avoid a U.S. trade war:
-
Limited Cohesion: BRICS lacks a unified economic strategy, with members like India and Brazil maintaining strong U.S. ties. The bloc’s diversity makes it an unreliable shield against U.S. tariffs.
-
Retaliatory Risks: Countries aligning with BRICS face Trump’s threatened 10%–100% tariffs, which could deter smaller economies from fully committing.
-
Economic Dependence on the U.S.: The U.S. remains the world’s largest consumer market, and many BRICS nations rely on it for exports. For example, China’s smartphone exports (including Apple products) and India’s pharmaceutical exports are vulnerable to U.S. tariffs.
Alternative Strategies to Avoid a Trade War
-
Bilateral Negotiations: Smaller economies like Vietnam and the UK have secured trade deals with the U.S. to avoid high tariffs. Larger players like the EU are negotiating to maintain provisional 10% tariffs. Diplomacy, as seen with Mexico’s talks with Trump, can yield exemptions.
-
Regional Trade Agreements: Strengthening agreements like the USMCA or ASEAN can provide buffers against U.S. tariffs. Canada and Indonesia’s recent trade deal exemplifies this approach.
-
Diversifying Trade Partners: Countries are rerouting exports through intermediaries (e.g., Chinese goods via Vietnam) to evade tariffs, though this risks U.S. scrutiny.
-
Legal Challenges: A U.S. trade court briefly blocked Trump’s tariffs on May 28, 2025, citing overreach, though the ruling was paused on appeal. Congressional action to limit executive tariff authority is another potential check.
-
Economic Resilience: Nations like the EU are implementing “tariff shields” to subsidize businesses affected by U.S. tariffs, mitigating economic fallout.
Why BRICS Alone Isn’t the Answer
While BRICS offers a platform for challenging U.S. dominance, it cannot fully shield countries from a trade war. The U.S. dollar’s entrenched role in global trade, coupled with America’s market leverage, makes complete disengagement impractical. Moreover, Trump’s tariffs are not solely about BRICS but also target allies and non-aligned nations, suggesting a broader strategy of economic coercion. Countries must balance BRICS engagement with pragmatic U.S. negotiations to minimize tariff impacts.
Alternative economic framework
President Trump’s aggressive tariff policies in 2025 signal a potential new trade war, expanding beyond his first-term focus on China to include allies and BRICS nations. His rhetoric frames BRICS as a threat due to de-dollarization efforts, but the bloc’s diversity and lack of a unified currency make it a competitor rather than an enemy. American anxiety stems from rising consumer prices, job losses, and geopolitical uncertainty, exacerbated by Trump’s erratic policy approach. While BRICS offers an alternative economic framework, it is not the only—or most effective—way to avoid a U.S. trade war. Bilateral negotiations, regional agreements, and legal challenges provide viable alternatives for nations seeking to navigate this turbulent economic landscape.
By understanding the motivations behind Trump’s tariffs, the limitations of BRICS, and the broader economic implications, countries and consumers can better prepare for the challenges ahead. As global trade dynamics evolve, a balanced approach combining diplomacy and economic resilience will be key to mitigating the fallout of a potential trade war.
