The recent statements by U.S. President-elect Donald Trump regarding the imposition of tariffs on BRICS countries reflect a broader trend of economic confrontation that extends beyond China. This anticipated return of economic warfare signals a challenging era for developing nations, particularly those within the BRICS alliance, which includes Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates.
Trump needs to recognize that the BRICS countries are not attempting to dismantle U.S. hegemony; rather, they aim to address the detrimental effects of the dollar’s overwhelming dominance. Historical context is crucial here: developing nations have repeatedly suffered under U.S. monetary policies, such as rising interest rates that prompted capital flight, exacerbating their economic pressures.
If the U.S. seeks to maintain its dominance, it must reconsider how long it can do so irresponsibly. The BRICS nations’ efforts to establish an alternative currency for trade cooperation arise from a genuine desire to alleviate these economic strains. While launching a BRICS alternative currency still requires a lot of work, the increasing weaponization of the dollar by the U.S. will drive these countries to depend more on their local currencies.
Rather than threatening tariffs, Trump should engage with these countries to propose viable pathways to monetary stability. While Trump’s threats could materialize gradually, he should not assume that his approach will prevail. Economic stability has become an irrevocable priority for developing nations, and the U.S. risks greater losses as confidence erodes. This shift toward protectionist policies could lead other countries to resist U.S. products, undermining U.S. economic interests.
Egypt’s response to Trump’s threats
To understand Egypt’s situation mor, we will start by reporting trade dynamics between the two countries. The volume of trade between Egypt and the United States of America reached $7.3 billion in 2023. Of this, the value of Egyptian exports to the United States amounted to $1.9 billion, while Egyptian imports from the United States totaled $5.4 billion in the same year. Therefore, I do not believe that Trump’s threats will cause much panic in Egypt. The United States could potentially lose the Egyptian market if a trade war breaks out, which would be a greater loss for the U.S. than for Egypt, as the latter can explore alternative markets, especially since the volume of exports to America is not that substantial.
If we examine the nature of the products that dominate the trade relationship between the two countries, we find that ready-made clothing occupies the top position in Egyptian exports to the United States, accounting for 53.1 percent of the total exports. This is followed by plastics and their products in second place, and carpets in third. Meanwhile, oil and medicinal plants rank first among Egyptian imports from the U.S., making up 14.8 percent of the total imports.
Thus, tariffs and trade wars will compel the Egyptian government to seek compensation for its exports by reaching out to other markets. Conversely, the United States stands to lose the Egyptian market if Egypt responds by imposing tariffs on American products of higher value. These trade wars are certainly not preferred by Egypt or any other country, as they are not in anyone’s best interest.
Prior to Trump’s threats, Mr. president Abdel Fattah Al-Sisi of Egypt recently emphasized at the BRICS Kazan Summit the inadequacies of the current international order in addressing global issues. He advocated for increased cooperation among BRICS nations, highlighting the importance of local currencies in trade agreements.
Regarding Egypt’s response to Trump’s threats, the country has made a significant move by announcing its participation in the “PAPSS” system—an initiative aimed at facilitating trade and financial transactions in local currencies among African countries. This announcement came shortly after Trump’s remarks, highlighting Egypt’s proactive stance. The PAPSS system, managed by the African Export-Import Bank, includes 14 central banks across Africa, with Egypt’s Central Bank becoming the 15th participant. This system enables rapid cross-border payments within 120 seconds and has proven to be a reliable, cost-effective infrastructure for financial transactions.
This reflects a proactive move by Egypt to increase exports to African countries, aiming to compensate for any potential losses from the U.S. market. Official data indicated that Egypt’s exports in the first seven months of 2024 were primarily directed to Arab countries, followed by the European Union, the United States, and then African countries. Egypt’s entry into the PAPSS system currently signals its readiness to enhance trade and improve exports to African nations.
Egypt’s decision to join the PAPSS system at this juncture sends a powerful message: it is too late for the U.S. to impose its old hegemony without expecting a robust response from developing nations. Relying on sanctions and tariffs as tools to deter economic cooperation among BRICS nations is no longer viable. If Trump perceives BRICS as the problem, he is mistaken. The real challenge lies within the gaps and deficiencies in the current international system that these countries seek to address. Developing nations will increasingly turn to local currencies for trade, even in the absence of a unified alternative currency.
Additionally, Trump’s declarations raise legal concerns, as they do not align with the World Trade Organization (WTO) regulations and rules. This begs the question: to what extent will the U.S. appear to disregard international law? Trump’s threats are more of political posturing than actionable policies, but if they come true, they could signify the end of a stable international order capable of managing global competition among countries.
Trump must understand that reckless trade war tactics will affect not only the targeted countries but also empower BRICS to gain political legitimacy and encourage more nations to confront American unilateralism. This shift could result in greater long-term losses for the U.S. Whatever Trump does, the dollar will not hold the same weight as it did in previous decades. This shift is not solely the result of developing countries’ desire to marginalize the dollar but rather stems from the misuse of that dominance by successive American administrations.
In conclusion, the international order has fundamentally changed. The U.S. can no longer expect to engage with countries as it did in previous decades. The evolving power dynamics, compounded by ongoing global disputes, have prompted developing nations to adopt more pragmatic and responsible diplomatic relations. Imposing tariffs will not deter this shift; instead, it may accelerate the move toward economic independence and collaboration among BRICS nations.
Kicking Back the Ladder. The title I’ll give to Trump’s threats
As an Egyptian researcher specializing in international relations, I am certain that the United States, through Trump’s threats, is heading towards the game of kicking the ladder for the second time in its history. The first time was when Western countries, especially America, rose economically thanks to old protectionist policies adopted to encourage industry and production. Then, after they did that and succeeded, they kicked this ladder and fought any country that wanted to impose protectionist policies to achieve the same goal. After countries began to respect economic openness and freedom of trade, now we see Trump wanting to kick this ladder of free market and restore protectionist policies to the entire world. The threat is not only limited to BRICS. America will do that with any country that might want to compete with it. Trump has also threatened Mexico and Canada, so this approach is serious because it may lead, after years or simple decades, to protectionist policies that reach the level of wars.
As a result, the Egyptian state, as is clear from the statements of officials, is aware of the danger of the current situation and the weaponization of the dollar. Therefore, it will, like all developing countries, exert all efforts to enhance trade without protectionist policies and will work to reach different markets to reduce the economic blockade by any country practicing monopoly. This is a great opportunity that Egypt realizes to bring BRICS countries closer together.
The Egyptian response can be summarized in several steps. First, Egypt remains committed to diplomatic negotiations with all countries in various situations. Therefore, I expect Egypt to begin urging President Trump to reconsider his practices of weaponizing the dollar and to uphold the principles of free trade and commitment to WTO rules.
Second, Egypt will continue to seek alternatives by fostering closer ties with various markets within the BRICS organization and establishing more local currency payment agreements with major partners. This strategy aims to mitigate any potential losses if the U.S. president does not adhere to diplomatic dialogue, as evidenced by Egypt’s entry into the PAPSS agreement. Ultimately, Egypt may find itself compelled to impose retaliatory tariffs if Trump follows through on his threats.
Third, Egypt recognizes the dangers of unilateralism in managing international affairs. Consequently, I envision Egypt continuing to work towards long-term security through further engagement with developing countries and emerging markets. It will also encourage more nations to adopt local currencies in bilateral trade agreements. In short, Trump’s threats will drive most countries, including Egypt, to seek alternatives to avoid being coerced in the coming decades.