Dollar Dominance, Trade Risks & Delhi's Balancing Act – Why Trump's BRICS Threats Matter For India

India.com

a day ago

New Delhi: At a time when India inches closer to finalising a trade deal with the United States, a thunderclap from Washington has cast shadows over the celebration. US President Donald Trump's blunt message, posted publicly this week, warned that any country aligning with what he described as BRICS' 'anti-American policies' would face an additional 10% tariff without exceptions.
As one of the founding members of BRICS, India finds itself at the centre of this growing storm. The recently concluded Rio de Janeiro summit of the bloc had laid out an ambitious declaration. There was no mention of the United States, but it still sent ripples through Washington. The BRICS statement challenged unilateral economic measures, defended multilateralism, voiced concern over tariffs that disrupt global trade and pushed for changes to global governance. These words appear to have stung.
What followed was Trump's retaliation. On his Truth Social platform, he wrote that siding with BRICS' economic vision would come at a cost. The timing could not have been more crucial. He is expected to begin announcing trade deals from Monday, and India is among the countries on the list.
In Delhi, this new tension is being watched with a mix of caution and calculation. Trade experts in the capital believe the core of Trump's anger lies deeper within the BRICS push for currency alternatives. For years, Russia and China have spoken of a new financial system to bypass the dollar. In 2022, Russia even floated a proposal for a BRICS reserve currency.
Many Indian analysts suspect this is what triggered Trump's fury. The dollar remains Washington's most powerful economic weapon. The United States used it in 2012 to isolate Iran and again in 2022 against Russia. Any attempt to weaken its grip invites blowback. Despite its lack of political cohesion, BRICS still threatens that power by raising the idea of currency diversification.
Indian economists see the bigger picture. The call for a common BRICS currency faces hurdles. Political will is scattered. China's dominance in the bloc sparks unease among other members. But the conversations alone unsettle Washington. That is why even vague references to multilateral financial systems draw fire.
Meanwhile, India, experts are of the view, must walk a fine line. It is preparing for what is being described as a 'mini trade deal' with the United States. Reports suggest Delhi has already agreed to a baseline 10% tariff, but higher rates – up to 26% – remain on the table. Agriculture and dairy continue to be sticking points.
At the same time, India cannot ignore its standing in BRICS. It shares that space with strategic rivals like China but also long-standing defence and energy partners like Russia. The bloc includes emerging economies looking for new trade paths. Turning away completely would be costly.
Domestic industry lobbies in India are growing nervous. Sectors like textiles, pharma and information technology could suffer if Trump hikes tariffs further. Executives fear the fallout of a new wave of American protectionism. What adds to the anxiety is the unpredictability. Trump has changed course before. His sudden termination of a long-standing free trade pact with Vietnam has become a cautionary tale.
Despite the tensions, some foreign policy voices in Delhi urge calm. They argue that BRICS has always been an idea more than an institution. Its members rarely share political agendas or geographical interests. But that has not stopped it from becoming a target.
Others believe Trump's aggressive approach may backfire. His posture could push India to double down on groups such as BRICS and the Global South. But that path brings its own dilemmas, especially with China pulling the strings in many of these platforms.
At the heart of it all, the challenge remains the same – can India navigate between its old allies and emerging coalitions without inviting punishment from either? With Trump's new tariffs looming, the question is no longer hypothetical. The countdown has begun.