Say Not the Name
We’re Cursed Enough
On 11/30/24 Trump promised a 100% tariff on all the BRIC block of nations if they acted to undermine the US dollar. Well, thundering ultimatums are Trump’s default position when he feels threatened. How in the world did the strength of the dollar make it to this week’s Top Ten Puzzling Remarks?
It is a tale
Told by an idiot, full of sound and fury
Signifying nothing.
— Macbeth (Act 5, Scene 5)
Firstly, the BRICS bloc does not need to work to undermine the US dollar. We’re doing a fine job of that without significant outside assistance. https://en.wikipedia.org/wiki/National_debt_of_the_United_States
Secondly, Trump already has the heads of state of our two major trading partners telling him that they are not taking seriously his most recent 25% tariff announcement. It’s very little to no skin off their respective noses if the guy is penalizing his own economy. Again. The demand for their trade goods is baked in.
Just like the last time he pulled this stunt--American businesses will pay the penalty and pass it on to the consumer. Many of whom will not connect the dots between their Election 2024 vote for Trump and his lick boot representatives in Congress with why everything they want or need costs more now. Having knee-capped the poor and Average Joe to fund the tax cut he promised his Billionaire Buddy Club, he will need to contemplate our third-largest trading partner—China.
And here is where the wicket gets a little sticky. And sabre rattling at BRICS hints at a disturbing turn of events since Trump’s first term in office—he has lost the advantage of strength and authority.
On the 2024 campaign trail, Trump proposed a 60% tariff on China. Recall that the best he could do to end his disastrous trade war with China during his first administration was a tense phase-one agreement in January 2020. The Biden administration left those tariffs in place and added additional levies on electric vehicles and solar panels.
https://en.wikipedia.org/wiki/China%E2%80%93United_States_trade_war
I was so ignorant about BRICS that I had to do a little research. Bear with me as I share the results with anyone else as puzzled as I was.
“BRICS is an intergovernmental organization comprising nine countries-- Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates. BRICS was originally identified to highlight investment opportunities. The grouping evolved into a geopolitical bloc, with their governments meeting annually at formal summits and coordinating multilateral policies since 2009. Relations among BRICS are conducted mainly based on non-interference, equality, and mutual benefit.
The founding countries of Brazil, Russia, India, and China held the first leaders summit in Russia in 2009 under the name BRIC. Following a renaming of the organization, South Africa attended its first summit as a member in 2011 after joining the group in 2010. Iran, Egypt, Ethiopia, and the United Arab Emirates attended their first summit as member states at the 2024 summit in Russia. Saudi Arabia has not responded to an invitation to join BRICS, and is still considering joining.
Currently, the group is dominated by China, (emphasis added) which has about 70% of the organization total GDP. Combined, the BRICS members encompass about 30% of the world's land surface and 45% of world population. South Africa has the largest economy in Africa whereas Brazil, India, and China are among the world's ten largest countries by population, area, and gross domestic product (GDP, nominal and PPP). All five initial member states are members of the G20, (emphasis added) with a combined nominal GDP of US$28 trillion (about 27% of the gross world product), a total GDP (PPP) of around US$65 trillion (35% of global GDP PPP), and an estimated US$5.2 trillion in combined foreign reserves (as of 2024).
To some in the West, the BRICS countries are considered the alternative to Western dominated institutions led by nations of the G7 bloc comprising some of the leading developing economies. Together they have implemented competing initiative such as the New Development Bank, the BRICS Contingent Reserve Arrangement, the BRICS pay, the BRICS Joint Statistical Publication and the BRICS basket reserve currency.” https://en.wikipedia.org/wiki/BRICS
That big bunch of words and statistics has one clear take-away. China has been busy girding its loins for battle against any uppity G7 or UN partner. While lining its nest with the feathers of profitable trade inside BRICS. And it put the pedal to the metal while Trump was out of office.
According to Google, in late March 2023, China and Brazil finalized an agreement to conduct trade using their respective currencies. In December of 2023, Russia and China expressed 'their intent to abandon the US dollar in their bilateral transactions'.
Here’s a self-evident truth in dangerous times--“Trump loves tough talk, but he wants respect and admiration more than anything else. Crashing markets, spiking inflation, ugly images and bad PR—that’s not his goal.” Susan del Percio, reporting for MSNBC online 12/01/24.
So, as for levying a 100% tariff on ALL goods from Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates—now that I understand the threat, I am left to wonder just what information Trump’s landing teams have viewed that scared him badly enough to send him soaring into such a fatally flawed bluster.
Just how shaky is the US dollar?
We the People would love to know.
And, while we’re in the Show and Tell mode: What “transactional” advantage do we still retain vis-à-vis any of our past, present, or proposed trading partners?
In a multilateral (G7, BRICS) world, how is pulling up the US trading drawbridge even possible, let alone wise?
Feel free to share.