Trump threatens BRICS with 10 per cent extra tariffs: Is India-US trade deal in danger?

US President Donald Trump directed his ire at the BRICS coalition of developing nations, threatening an additional 10 per cent tariff on countries aligning with “anti-American policies”, including India. This happened as India neared a landmark bilateral trade agreement with the US, which now seems to be hanging in the balance.

The BRICS, which began its summit in Rio de Janeiro on Sunday, opened with Brazilian President Luiz Inacio Lula da Silva likening the coalition to the Non-Aligned Movement during the Cold War, where many countries opted out of picking a global side.

Mere hours later, Trump took to his online platform Truth Social to post, “Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10 per cent Tariff. There will be no exceptions to this policy.”

India is one of the major members of the BRICS, with Prime Minister Narendra Modi attending the summit this time, calling for urgent reforms to the UN Security Council, the World Trade Organisation and leading financial bodies to reflect the current realities of the world.

“In the age of AI, where technology evolves every week, it’s unacceptable for global institutions to go 80 years without reform. You can’t run 21st-century software on 20th-century typewriters!” he said.

The two other major players in the BRICS, Chinese President Xi Jinping and Russian Premier Vladimir Putin, did not attend the summit. Joining them in bowing out of the meeting were Iranian President Masoud Pezeshkian and Egypt’s Abdel-Fattah el-Sissi.

The 11 major emerging economies of the world that form the BRICS represent around 40 per cent of the world’s GDP and 26 per cent of the global trade.

PM Modi called the reforms championed by the West “merely symbolic” and called for better governance to benefit the Global South.

The Indian premier’s push might have put him at loggerheads with Trump, especially at a time when the US and Indian delegations were in the final days of clinching the first tranche of a bilateral trade agreement (BTA).

July 9 would see the end of the temporary suspension of the Trump tariffs imposed on India and many other nations. The BTA was expected to be achieved before the date, but Trump’s latest tariff threat added to the negative sentiment.

Monday morning saw Indian equity benchmarks, the Sensex and Nifty, slump in early trade. Concerns surrounding the India-US BTA saw foreign investors pull out more money from local equities.

“Concerns surrounding a US-India trade deal and the fallout of Sebi’s report on Jane Street will be influencing market movement today. There are reports of a possible interim trade deal between the US and India before the July 9th tariff deadline. If that happens, that would be a positive,” said V.K. Vijayakumar of Geojit Investments.

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