How BRICS Can Survive ‘America First’

The BRICS grouping, now expanded to 10 nations, faces significant pressure from U.S. 'America First' policies, including tariff threats and actions against dollar dominance. Despite limited material successes, the article posits that Washington's unilateralism paradoxically strengthens BRICS' rationale as an alternative structure for global south states seeking to spread risk. To enhance its relevance and survive this onslaught, BRICS is advised to adopt a three-pronged strategy: reassure the U.S. it is not anti-Western, retrench from overly broad agendas to focus on core strengths, and reinforce key comparative advantages like development finance via the New Development Bank, climate action, global health, and defending the global trading order, aiming to shape a more balanced international order.

Analysis

The BRICS grouping, now expanded to ten nations, faces significant headwinds from U.S. 'America First' policies, including direct threats of a 100% tariff should the bloc challenge the U.S. dollar's dominance. Paradoxically, Washington's unilateralism and trade actions against member states strengthen the strategic rationale for the group's existence as a risk-mitigation platform for global south nations. Despite its ambitions, BRICS' material impact remains limited, with its most notable success being the Shanghai-based New Development Bank (NDB). The NDB, while lending a modest $4 billion annually, has maintained a high credit rating and operates with innovative governance, though its membership of nine lags significantly behind the over 100 members of the Asian Infrastructure Investment Bank (AIIB). The proposed strategy for the bloc involves a careful three-pronged approach: reassuring the U.S. that it is not an anti-Western alliance, retrenching from an over-extended agenda to focus on economic governance, and reinforcing comparative advantages. Key areas for reinforcement include expanding the NDB, championing climate adaptation finance, leveraging the vaccine manufacturing capabilities of China and India, and defending the global trade order.

Key Decisions for Investors

• Investors should monitor BRICS' diplomatic messaging for signs of de-escalation with the U.S., particularly regarding the dollar's status, as a reduction in perceived threats could lower tariff risk for assets exposed to trade with the bloc.
• The primary investable theme centers on the New Development Bank's potential expansion; tracking increases in NDB membership and lending for infrastructure and sustainability projects could signal opportunities in project finance, engineering, and green technology within member countries.
• Given the stated focus on vacated U.S. priorities, long-term investors could scout for emerging leaders in climate adaptation, water management, and vaccine development within key BRICS nations, particularly China and India.
• Note the political risk stemming from the bloc's nature as a 'loose coalition'; the absence of Russian and Chinese leaders from the Rio summit underscores potential fragmentation, suggesting that investors should discount the group's ability to act cohesively on contentious geopolitical issues.