US warns India, China, and Brazil against doing business with Russia, threatens to impose tariffs: Read how the Trump’s tariff bluff won’t stop sovereign powers in a multipolar world
The recent statement by NATO Secretary General Mark Rutte has ignited flames across the world, specifically in Brazil, China, and India. His comments and warnings to Brazil, China, and India have raised serious tensions among these countries, as they could face severe economic penalties if they continue conducting business with Russia.
On Wednesday, July 16, Rutte urged leaders in Beijing and Delhi to press Russian President Vladimir Putin to take peace negotiations seriously. Rutte said, “if you are the President of China, the Prime Minister of India, or the President of Brazil, and you continue to trade with Russia and buy their oil and gas, then you know, if the man in Moscow doesn’t take the peace negotiations seriously, I will impose 100 per cent secondary sanctions.” This is the second instance where the West has threatened tariff on these nations for dealing with Russia.
Secondary sanctions are basically the economic penalties imposed by countries like the US on individuals, companies, or governments that engage in trade with a sanctioned nation. In this case, Russia is the nation with which the US has a long-standing rivalry. In the ongoing Russia-Ukraine war, the US has extended its support to Ukraine by providing various kinds of military hardware. Paralally, US and EU nations have imposed sanctions against Russia and Russian companies.
The latest proposals from Trump include 100% tariffs and even harsher penalties, such as completely freezing violators out of American markets. A bill currently pending in the US Senate is calling for tariffs of up to 500%. It is also important to note that while the US’s aggressive trade tariffs may reflect its dominance over other nations, such measures could backfire on its own strategic policies.
Brazil’s retaliatory action against the US
Amid charges against former right-wing president Jair Bolsonaro, Trump alleged that Brazil’s current president Luiz Inácio Lula da Silva was leading a “witch hunt that should end IMMEDIATELY!” Bolsonaro, who shares a close political bond with Trump, is facing trial for allegedly attempting to stage a coup against Lula. In response to these accusations and Trump’s tariff threats, Lula vowed to reciprocate if Trump follows through with any punitive measures.
Lula confirmed via a post on X, that Brazil is a sovereign nation with independent institutions and will not tolerate any form of external tutelage. Any measure to unilaterally increase tariffs will be met with a proportional response, in accordance with Brazil’s Law of Economic Reciprocity. Brazil’s firm and assertive response to the US tariff policy marked the first instance of a country directly matching the United States’ tariff threat with reciprocal action.
As per a report, the U.S. ran a $6.8 billion trade surplus with Brazil last year. This means the US exported more goods to Brazil than it imported. The report also highlighted that Brazil exported $40.4 billion worth of goods to the US in the same period. Crude oil topped the list, followed by $2.8 billion in intermediate iron and steel products, $2.38 billion in planes, helicopters, and spacecraft, $1.9 billion in coffee, $1.74 billion in petrol oil and other mineral oils, $1.55 billion in chemical wood pulp (soda or sulphate), $1.42 billion in crude iron, $1.42 billion in bulldozers and other machinery, $1.19 billion in fruit juices, and $885.03 million in frozen meat. These numbers stress the degree of US interdependence on Brazil, and indicate the extent to which Brazil could retaliate by imposing reciprocal tariffs on the US.
Trump’s exchange offer to other countries often comes with his own benefit-centric policy. He stated in the letter circulated to the other nations that “There will be no tariff if Brazil, or companies within your country, decide to build or manufacture products within the United States.”
BRICS Self-Currency Policy
During the BRICS summit, the member nations, Brazil, Russia, India, China, and South Africa, continued discussions around creating a gold-backed currency known as “Unit” as an alternative to the US dollar. The implementation of such a currency would allow these nations to assert greater economic independence while challenging the current international financial system. Reportedly, in 2023, one-fifth of oil trade transactions were conducted using non-US dollar currencies, which marks a major setback for the U.S. dollar’s dominance.
The ongoing trade tariffs imposed by the US could backfire severely if all BRICS nations unite to establish a new reserve currency. It would significantly reduce global demand for the US dollar, thereby accelerating what is known as de-dollarization. Additionally, Trump’s “America First” policies could further increase the dollar’s value against global counterparts, pushing BRICS member nations to find an alternative path away from US financial dependence. This demand for a separate currency arose from recent global financial instability and the aggressive nature of U.S. foreign policy.
However, at present there is no official proposal for a BRICS currency, as feared by Donald Trump. Instead, BRICS member nations are conducting bilateral trades in their own currencies, instead of using dollar or euro. Russia, under the weight of Western sanctions, has moved quickly to use the yuan and ruble for a majority of its international transactions. China, meanwhile, has been pushing the yuan internationally for years. India also trying international deals in rupee, with limited success.
The goal is not to replace the dollar outright but to make sure it’s no longer indispensable. Interestingly, while Trump has threatened strong action against launch of a new currency by BRICS, US govt can hardly do anything if individual nations choose to do trade in their own currencies.
While the focus is on currency, BRICS is trying to hit another western monetary instrument, the SWIFT. During the recent BRICS summit in Brazil, Russia strongly adcocated establishment of a cross-border settlement hub for member nations under the New Development Bank (NDB). While it was not mentioned directly, this intends to be direct competition to SWIFT, the current global platform used to settle internatoinal transactions.
In fact, the BRICS Pay, a mechanism for BRICS member states to receive and make payments in their own local currencies, is already under development. The system featuring a decentralized Cross-border messaging system will enable international transactions bypassing the SWIFT system. As this system enables transactions in local currency, it will also reduce the dependency on the US dollar.
Threat pushing closer ties between Latin American countries and BRICS
The US’s abrupt imposition of tariffs on 21 countries could pressure Latin American nations into forming stronger ties with countries like China, India, and Brazil. For example, India, which has maintained neutral relations with both the west and the Russia, also extends support to smaller nations such as Kenya and Peru by offering affordable medicine, technological support, and educational collaborations. These countries feel more secure under such partnerships than in relying on US aid.
China, being the top trade partner for many Latin American and African countries, has made significant infrastructure investments in those regions areas often overlooked by the West. If a tariff were to be imposed on countries like Argentina or Zambia, or if the US were to punish them for trading with Russia, they could turn to China to avoid economic isolation.
Similarly, Brazil remains one of the leading voices in South America and has consistently opposed US interventions in internal conflicts such as those in Palestine or Venezuela, while promoting cooperation among Global South nations. People in these countries may prefer seeking aid from Brazil rather than turning to the US, which is often perceived as politically driven in its aid policies.
Import of Russian oil and gas by the European Union
Despite the US’s attempts to isolate Russia and limit its economic power, European member countries continue to import large quantities of Russian fossil fuels often spending more on these imports than on financial aid to Ukraine. According to estimates from the Centre for Research on Energy and Clean Air (CREA), EU member states bought €21.9 billion (£18.1 billion) worth of Russian oil and gas in the third year of the war, even though several initiatives are underway to reduce Europe’s reliance on Russian energy.
One critique noted, “Purchasing Russian fossil fuels is, quite plainly, akin to sending financial aid to the Kremlin and enabling its invasion. It’s a practice that must stop immediately to secure not just Ukraine’s future, but also Europe’s energy security.” In 2024 alone, the EU spent 39% more on Russian fossil fuel imports than it earmarked for aid to Ukraine. Notably, this aid figure excludes military and humanitarian contributions.
At the Munich Security Conference, during a session hosted by German economic daily Handelsblatt, Indian External Affairs Minister S. Jaishankar stated that Europe must understand India cannot have a view of Russia that mirrors Europe’s. He reiterated that India continues to purchase Russian oil despite Western sanctions and emphasized that India and Russia have always maintained stable and friendly ties, and that Moscow has never harmed India’s interest.
All the above stances reflect one unified message, the Trump administration’s tariff threats are unlikely to deter sovereign nations in a rapidly evolving multipolar world.
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