The crucial BRICS summit matters to the US

BRICS could help fill gaps in supply chains caused by U.S. trade war

Trump says his trade war is about protecting U.S. industry from unfair trade practices. Ultimately, it seems the goal is to force countries that the president thinks are treating the U.S. unfairly to, well, be nicer.

To make that strategy work, and to justify the harm to the U.S. economy caused by tariffs, the trade war actually needs to put pressure on other countries. This doesn’t work if those countries can find other sources for both the products they want and markets for the goods that they produce.

This is where BRICS comes in. The association of emerging economies is geographically diverse and produces a range of products in addition to offering huge markets. Already, China has sought to exploit these relationships and is sourcing soybeans, once bought from the U.S., in Brazil.

As tensions escalate, these five counties who already have existing relationships will likely turn to each other to fill gaps in products and find markets for goods. When this happens, the impact could be long term shifts in production and sourcing that cut out the United States.

Needless to say, this would be bad for the U.S. economy and industries that depend on international trade. Even as Trump bails out agriculture, experts realize that artificially propping up the economy is not sustainable, never mind the harm that even the temporary infusion of cash causes.

Trade war could strengthen BRICS political ties

Although BRICS has faced legitimate criticism for lack of strong political ties, the trade war will likely push the five nations closer together. The five emerging economies represent more than 40 percent of the global population and more than 23 percent of the gross world product and is projected to continue to expand.

Together, they form a powerful block that opens up access not just to member countries but to their geographic regions. As such, BRICS could act as a counter balance to U.S. dominated trade pacts. This would further displace U.S. influence already threatened by Trump’s attacks undermining agreements such as NATO or the Trans-Pacific Partnership. Ultimately, strengthening political cooperation among BRICS nations would erode American geopolitical power – especially if BRICS’ political and economic alliances come to include military agreements.

Closer BRICS alliance means more powerful institutions

The theme of the summit is “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4^th Industrial Revolution.” This fits nicely with the idea of the New Development Bank, established by BRICS in 2014, to finance infrastructure and development not only in member nations but also in other emerging economies. The New Development Bank is also meant to challenge the existing order of international institutions like the IMF and World Bank. Demonstrating the ambitions of the project, the first regional office of the bank was launched in Johannesburg.

Part of the goal of this financing is also, as the theme states, advancing the 4^th industrial revolution characterized by new innovative technologies such as artificial intelligence, robotics, biotechnology, and nanotechnology among others.

China has already signaled its intent to dominate some of these industries with its “Made in China 2025” initiative. The broader aim of BRICS, however, would be to re-center the development of high end technology away from the west and to member nations.

Not only would this economically benefit member states, but it would lift the dominance of the United States and its ability to leverage access to technology such as advanced microchips. This would not only hurt the economy but hurt U.S. influence potentially making the country dependent on others.

Although BRICS might not be in the forefront of the minds of Americans, it is worthwhile to pay attention to the negotiations and agreements made during the summit in South Africa.