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We're done catching a cold when US sneezes, thanks
We're done catching a cold when US sneezes, thanks

Free Malaysia Today

time6 hours ago

  • Business
  • Free Malaysia Today

We're done catching a cold when US sneezes, thanks

So it has come to pass: the '90 trade deals in 90 days' deadline set by US President Donald Trump is up, and as expected, there weren't 90 deals signed. However, Malaysia is among the ever-increasing number of countries receiving a form letter from Trump inviting us to trade with the US, the richest country in the world. Such letters, unprecedented as they are, are what now pass for trade deals and diplomacy. We'd certainly like to accept that invite, although the threat of harsher tariffs by Aug 1 if we didn't is a bit of a concern. The new Aug 1 deadline is firm… or flexible… or firm… depending on who and when it's being mentioned. So here we go again. Meanwhile Malaysia, both as a country and as the current chair of Asean, is cozying up to BRICS, the grouping of newly emerging economies that's grown since Brazil, Russia, India, China and South Africa became founding members. Turning to BRICS certainly carries some risks. Trump has threatened a 10% tariff on BRICS members if they try to overturn the status of the US dollar as the world's reserve currency through what is called 'de-dollarisation'. And even before doing so, he has already imposed a 50% tariff on Brazil for being mean to him as well as to his friend, the embattled previous president of Brazil, Joao Bolsonaro. And this is happening to a country with whom the US actually enjoys a positive balance of trade. Some Malaysians are rightfully worried about us also raising Trump's ire. Given the importance of trade with the US, these are valid fears, and it's understandable that some feel we should keep our heads down. What Malaysia should do But here are some perspectives on why I think it's worth the risk. First, we're never going to get zero tariff from the US, unless Trump is especially besotted with us, as he is with Russia. Even if our balance of trade is in favour of the US – as with Australia, Singapore, and Brazil – we'd still be hit by tariffs under one pretext or another. Trump is not beyond tearing up trade agreements he doesn't like, even those that he himself had signed earlier. Why? Because in spite of all the claims about fixing the balance of trade, the main reasons tariffs are being imposed by the US are quite simple. One is that Trump is a bully who enjoys the disruption he creates. He gets people all worked up in an uproar and then sits back and enjoys the spectacle. Once that has become normalised, he'll do something even more outrageous. And the cycle repeats again and again. So, expect more outrageous claims and accusations and threats, whether about trade or about anything else at all. Using up all the oxygen in the room has worked for him before, and he's just replaying his old favourites. The other, even more important reason, is tariffs have become the ideological nirvana of the extreme right MAGA Americans. These people, many of whom actually regard taxation as theft by the state against its citizens, have already passed laws that'll bring down the taxes of the ultra-rich, who are often their supports or their donors. Back to the 19th century Meanwhile Trump has spoken about setting up an External Revenue Service to handle tariffs, much like the Internal Revenue Service that now handles income taxes. The goal is to reduce the income taxes to nothing, and derive all the revenue needed to run the country through tariffs alone. Everything else, such as bringing back manufacturing, is just a distraction, especially the outright lies that it's the foreign countries and not local US citizens and businesses who will actually pay the tariffs. The America that Trump wants to make great again isn't the America that sent men to the moon, or helped win World Wars I and II. He's harking all the way back to the 19th century, before income taxes were introduced, when tariffs were the government's chief revenue earner. So, tariffs would be imposed by Trump on other countries no matter what. That they would wreak havoc on the US and global economy is not something that keeps him awake at night. It is delusional to think we could sweet talk our way out of them. Here's a way forward we need to consider. No country has borne the brunt of the US's economic and political aggression more than their closest neighbour, Canada, which now faces multiple tariffs, including 50% tariffs on steel and aluminium – two of its biggest exports to the US. Such a level of tariffs would be devastating on Canada – but the country has recognised that danger early enough and is pivoting away from the US, to other more friendly parts of the world, especially Europe and Asia. Canada's latest trade figures show an unsurprising decline in exports to the US, but surprisingly, a growth in total exports due to new foreign markets especially for oil and gas and agricultural products. Recession in US Meanwhile, the US economy, all claims and boasts aside, shrunk in the first quarter, and is likely to have shrunk in the recently concluded second quarter too, which would place it officially in an economic recession. And the US is also running up new and old debts by the trillions now and over the coming years, amid higher interest rates and a reduced appetite for US bonds among traditional lenders. It's clear by now the US is not playing some brilliant 4D chess. Other nations are finding out that appeasing Trump doesn't take the target off your back, and that moving forward to form new alliances and creating new markets might just be the only solution. The US doesn't have all the cards it claims to have. At some point, the combination of the inevitable recession, escalating inflation and high interest burden on their national debt and their economy at large will either bring about a 'regime change' or – as some wags have nicely put it – a 'chickening out'. While we must always be sensitive about the increasing unpredictability and even irrationality of the US, we mustn't forget an important factor – that BRICS, in its current membership, already has a total economy bigger than the G7 industrialised nations, which includes the US. Taking the BRICS road While focusing on the US, which forms a quarter of the world's economy, we mustn't forget the bigger, faster-growing and friendlier economies of BRICS. While BRICS are still far away from some truly earth-shaking moves, such as a common currency or outright de-dollarisation of trade, the US is forcing everybody else to look for new allies and friends and to reprioritise their strategies. We're basically surrounded by BRICS – India and China at the top, and Indonesia down below – with Asean itself becoming an increasingly recognised bloc. People in the west even know what Asean stands for now, as opposed to an American colleague of mine years ago who corrected me when I mentioned Asean, saying that is not how Asian is spelt! For too long we've taken the easier route of putting most of our eggs in the US basket. And for the longest time, that had benefited both parties tremendously. That relationship, however, in the words of Canada's Prime Minister Mark Carney, is over. Even without a US recession, the economic growth of an expanding BRICS would mean the US would have a slowly diminishing share of the world economy. This inevitability is also being speeded up by the US behaving unpredictably and often capriciously against its friends and allies. Look at how horribly the USA is treating Vietnam and Cambodia, countries that it almost destroyed during the Vietnam war. And yet these are countries that actually tried to suck up to Trump by being among the earliest to sign trade deals. That didn't work. Neither did it work for the United Kingdom, all lost and alone post-Brexit, obsequiously and embarrassingly sucking up to Trump. The humiliation may have been worthwhile had they obtained something meaningful, but they didn't. Future outlook Surprisingly, the new tariffs against Malaysia may not hurt us as much as you think. Competitors from Thailand or Indonesia or China for some of our key exports to the US, such as rubber gloves and medical products, face even higher tariffs than Malaysia. Not to mention that manufacturing of these products is never, ever, going back to the US, tariffs or no tariffs. Regardless of all that, Malaysia still has to start looking around for new markets and trade partners. That means pulling Asean closer together into a real economic bloc, but it also means making friends among the giants of tomorrow, such as China, India and the other BRICS economies. At some point, this madness in the US will be over, but it'll leave behind a much diminished and isolated US. The future won't be dominated by old, sclerotic Europe or Japan, or self-sabotaging US. It'll be a world dominated by BRICS. We have to make our moves early, and along with Asean, become a significant force charting the way forward for BRICS. That certainly doesn't mean abandoning the West, but it does mean that we will no longer live in fear of catching a cold when the US sneezes. The views expressed are those of the writer and do not necessarily reflect those of FMT.

From the margins to the centre
From the margins to the centre

The Hindu

time10 hours ago

  • Business
  • The Hindu

From the margins to the centre

The idea of the Global South historically referred to the grouping of countries primarily in Asia, Africa and Latin America that shared a history of colonialism and ongoing struggles against global inequalities. They sought to transform a historically Western-dominated world order through 'South-South cooperation' — a set of practices and organising concepts that these nations aim to use to achieve development through mutual assistance and increased solidarity among themselves. This aspiration has roots in landmark initiatives such as the Bandung Conference of 1955 and the Non-Aligned Movement (NAM), which sought to foster economic and cultural cooperation while promoting human rights and establishing a New International Economic Order (NIEO). These movements aimed to counteract the vertical power relations between former colonies and their colonisers, advocating for fair trade relationships, sovereignty over natural resources, and the right to nationalise key industries. Also Read | Global South's voice key to contemporary world's progress: PM Modi tells Ghana's Parliament The Global South has never been monolithic. Its diversity — vastly different histories, economies and political systems — has been both a potential source of strength and a cause of internal divisions that complicate efforts to form unified positions on global issues. However, the BRICS grouping has emerged as a more solidified possibility, representing a formalised attempt to advance many of the Global South's aims, even if it doesn't entirely embody its full aspirations or overcome all its inherent contradictions. The recent BRICS summit held in Rio de Janeiro exemplified this challenge, with members navigating different relationships with both the U.S. and Russia, particularly regarding the ongoing conflict in Ukraine, where most BRICS members have sought a middle ground in contrast to Western positions. Institutional voice BRICS began as an economic acronym coined by Goldman Sachs economist Jim O'Neill in 2001. It has now evolved into a substantial intergovernmental organisation comprising 35% of the global economy and almost half of the world's population — surpassing the G7's 30% economic share as of 2024. The bloc's primary objectives centre on fostering economic, political, and social cooperation among members while increasing their collective influence in international governance. This includes advocating for greater representation in global bodies, coordinating economic policy, and reducing reliance on the U.S. dollar. Initiatives such as the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) were designed to offer alternatives to Western-dominated financial institutions such as the World Bank and the International Monetary Fund. Also Read | G7 summit: Will highlight priorities of Global South in G-7, says PM Modi The Rio summit demonstrated both the potential and limitations of this approach. The declaration's strong language on Gaza and Iran reflected genuine consensus on critical geopolitical issues as opposed to the West's view, while India's successful inclusion of condemnation of the Pahalgam terror attack showcased the bloc's capacity to address diverse security concerns. The summit also endorsed expanded roles for India and Brazil in the UN Security Council, advancing a long-standing demand for greater Global South representation. Significantly, the summit introduced a new 'partner countries' category, extending associate status to nations including Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Thailand, Uganda, and Uzbekistan. This institutional innovation suggests BRICS is evolving beyond its original membership structure to accommodate broader Global South participation. Priorities and realities The Global South's diversity becomes particularly apparent when examining BRICS members' different regional contexts and priorities. Brazil's focus on environmental issues and sustainable development reflects its role as a guardian of the Amazon rainforest, while also serving its agribusiness interests. India's emphasis on technology and services reflects its emergence as a global IT powerhouse, even as it maintains significant agricultural and manufacturing sectors. China's Belt and Road Initiative represents perhaps the most ambitious attempt at South-South cooperation, yet it has also generated concerns about debt dependency among recipient countries. Russia's inclusion in BRICS, despite its geographical location largely in the Global North, reflects how the grouping wants to transcend simple geographical boundaries for shared interests in challenging Western hegemony. Intra-BRICS trade has grown at a faster pace than that of G7 countries, demonstrating tangible shifts in global economic activity. Trade between Brazil and China increased fiftyfold in 20 years, and China-India trade rose 28 times in the same period. The NDB has begun providing alternative funding for sustainable development and infrastructure projects, addressing perceived gaps left by traditional financial institutions. Yet, the path to challenging Western economic dominance faces significant obstacles. The U.S. dollar remains entrenched as the world's principal reserve currency, used in the vast majority of global trade transactions. While BRICS advocates for lesser dependence on the dollar, creating a workable alternative currency system faces enormous technical and political hurdles. Internal Contradictions A critical examination of BRICS reveals inherent contradictions that mirror broader challenges in South-South cooperation. While the rhetoric emphasises solidarity and mutual benefit, the pursuit of national interests by individual members can overshadow collective goals. For example, China's domination within the grouping has resulted in lopsided economic engagement with other developing nations, leading to what some critics have termed 'near-colonial patterns of trade', where raw materials are exported to China in exchange for manufacturing goods. Brazil's advocacy for fairer global trading systems, while simultaneously pursuing the interests of its competitive export-oriented agribusiness sector, exemplifies how national economic interests can complicate collective solidarity. Russia's recent actions in Ukraine negate the idea of South-South cooperation as a legacy of former colonised nations. Besides, Western powers have not remained passive observers of BRICS' growth. Donald Trump, responding to the bloc's criticism of unilateral tariffs and military strikes on Iran, threatened that any country 'aligning itself with' what he termed 'the Anti-American policies of BRICS' would face an additional 10% tariff. This marked an escalation from his earlier threats of 100% tariffs if BRICS countries attempted to replace the U.S. dollar as a reserve currency. Moreover, Western institutions have shown capacity to adapt and co-opt rising powers. The emergence of the G20 can be seen as a response designed to give emerging economies a seat at the table, even if decision-making remains largely influenced by dominant Western powers. Beyond National Interests: A People-Centered Vision As India prepares to assume BRICS leadership next year with its theme of 'Building Resilience and Innovation for Cooperation and Sustainability', the bloc stands at a crossroads. As the world's largest democracy and a major economy with complex relationships with both China and the U.S., India may be uniquely positioned to bridge internal divisions within BRICS. However, ongoing border tensions with China and India's growing strategic partnership with the U.S. through initiatives such as the Quad complicate its role as a unifying force. BRICS undoubtedly represents the most viable institutional expression of Global South aspirations, offering developing nations unprecedented collective economic leverage and political voice in global affairs. However, its current trajectory risks becoming merely another arena for great power competition rather than genuine transformation. The bloc's ultimate promise lies not in replacing Western hegemony with a new form of elite-driven multipolarity, but in evolving into a platform that prioritises the developmental needs and democratic aspirations of the Global South's peoples.

Why is Trump taking aim at BRICS?
Why is Trump taking aim at BRICS?

The Hindu

time11 hours ago

  • Business
  • The Hindu

Why is Trump taking aim at BRICS?

The story so far: U.S. President Donald Trump's threat to impose 10% tariffs on members of the BRICS grouping that held a summit in Rio de Janeiro this week is the latest in a series of similar threats. Why is BRICS in Mr. Trump's cross-hairs? Even before he was sworn in as U.S. President for the second time, Donald Trump had made it clear that he saw the BRICS grouping as 'anti-American' and a threat to the dollar that he needed to neutralise. On November 30 last year, Mr. Trump said the U.S. would require BRICS members to commit that they would not create a new BRICS common currency, 'nor back any other currency to replace the mighty U.S. dollar', threatening 100% tariffs on them. It's a threat he has repeated several times since. Mr. Trump's irritation appears to stem from BRICS declarations in South Africa in 2023 and Russia in 2024, where members that now also include Egypt, Ethiopia, Indonesia, Iran and the UAE, discussed a BRICS Cross-Border Payments Initiative that aims to facilitate trade and investment within BRICS countries using local currencies and other mechanisms. The initiative built momentum due to the problems Western sanctions on Russia have meant for trading partners in the Global South. What has the U.S. threatened to do? Last Sunday (July 6, 2025), just as BRICS leaders gathered in Rio for the 17th BRICS summit, Mr. Trump said in a social media post that any country aligning with BRICS would face a 10% added tariff. The penalty was 'just for that one thing' of being a member, Mr. Trump said later. It is unclear why the tariff rate was dropped to a tenth from the original threat of 100%, and even whether Mr. Trump will go through with the BRICS tariffs along with other reciprocal tariffs planned for August 1. But there seems little doubt that Mr. Trump wants BRICS de-fanged. 'You can tell the (U.S.) President is (upset) every time he looks at the BRICS de-dollarisation effort…(and) Rio didn't help,' said Steve Bannon, Trump's former White House chief strategist, according to Politico magazine. Editorial | Building resilience: On the 17th Summit of BRICS emerging economies In addition, the Trump administration has slapped 50% tariffs on Brazil after accusing President Lula da Silva of a 'witch-hunt' against former Brazilian President Jair Bolsonaro, who faces charges of attempted coup. It has also imposed 30% tariffs on South Africa after accusing it of unequal trade, as well as expressing concerns over the treatment of Afrikaners (White South Africans). Republican Senators close to Mr. Trump also plan to bring a bill called the Sanctioning Russia Act of 2025 that seeks to place 500% tariffs on imports of oil and sanctioned Russian products, which would hurt Russia, as well as India and China, its two biggest importers. Are Mr. Trump's concerns valid? Mr. Trump's concerns about de-dollarisation have been denied by practically every BRICS member. The South African Ministry of Foreign Affairs issued a detailed statement explaining why the BRICS attempt to use national currencies within the grouping is not the same as replacing the dollar as the global standard. While anti-U.S. rhetoric of some BRICS leaders has been harsh, the wording of the BRICS Rio declaration 2025 issued this week does not directly challenge the U.S. or the dollar. In the operative Paragraph 50, the leaders said they resolved to task ministers of finance and central bank governors 'to continue the discussion on the BRICS Cross-Border Payments Initiative and acknowledge the progress made by the BRICS Payment Task Force (BPTF) in identifying possible pathways to support the continuation of discussions on the potential for greater interoperability of BRICS payment systems.' Paragraph 13 expressed 'serious concerns' over the rise of unilateral tariff and non-tariff measures but didn't name the U.S. Where does India stand? The Modi government, hopeful of clinching a Free Trade Agreement with the U.S., has strenuously objected to Mr. Trump's categorisation of the BRICS as 'anti-American'. Also read: India will give a 'new form' to BRICS grouping in 2026: PM Modi In a parliamentary response on December 2, 2024, the MoS (Finance) Pankaj Chaudhury made it clear that the U.S. allegations referred to a report prepared by Russia during its chairmanship of BRICS, where it had spoken of 'possible alternatives relating to cross-border payments' and 'leveraging existing technology to find an alternative currency'. He added that the report was only 'taken note of' by other BRICS members, not adopted. In March 2025, External Affairs Minister S. Jaishankar was more categorical, saying there is no Indian policy to replace the dollar. He conceded, however, that BRICS members had differences, and there was no unified position of the grouping on the issue.

Rising South: An order rebalanced
Rising South: An order rebalanced

Deccan Herald

time12 hours ago

  • Business
  • Deccan Herald

Rising South: An order rebalanced

US President Donald Trump has, in his inimitable style, once again taken to social media to issue a threat to the BRICS countries huddled together to devise strategies against the US tariff attacks. 'Any country aligning with the anti-American policies of BRICS will be charged an ADDITIONAL 10 per cent tariff,' he said, hours after the BRICS finance ministers issued a statement that criticised the tariffs, calling them a threat to the global virtually to the BRICS gathering, Russian President Putin reiterated his suggestion of greater financial independence from the US dollar in international trade settlements. Trump is understandably annoyed at the revival of this narrative of criticising Trump's use of tariffs as a coercive policy to force countries to enter bilateral trade deals that favour the US, the BRICS summit proposed a series of reforms in the International Monetary Fund (IMF) and its currency valuation methods. According to the BRICS economic advocacy group, in the current economic uncertainty, the IMF needs to embrace urgent reforms in the quota system to increase the representation and voting power of developing countries, as the present system promotes dominance of advanced economies. The BRICS nations are also calling for an end to the 'gentlemen's agreement' which has historically favoured European countries in the IMF's leadership financial institutions, especially the two Bretton Woods institutions – the IMF and the World Bank (WB) – did play a significant role in the international financial architecture for some years. But they could not prevent the financial crisis nor bail the developed economies out of the crisis, much of which was their own creation. It has also been noted that their working and decision-making process continued to be greatly influenced by the developed 'North' and less relevant to the developing or underdeveloped 'South'. The last two or three decades have seen the global growth engine shift from the North to the South, which now houses three of the world's largest economies. Meanwhile, groupings such as BIMSTEC, BRICS, ASEAN, and SCO have added tremendous muscle to the emerging South-South countries add up to represent about 49% of the world's population, 39% of the global GDP, and 23% of international trade. In a changing geopolitical and geo-economic setting, when the US under Trump's administration is looking to withdraw from global institutions and looking more inwards in its quest for Making America Great Again (MAGA), the post-World War II economic institutions cannot expect to be relevant and succeed in their original objectives by remaining within a seven decades-old organisational structure. They must either reinvent themselves or face the possibility of paling into BRICS financial institutions and efforts under the South-South Cooperation (SSC) are assured signs of a collective leadership that is aligned with a multilateral world order – these are realities of the present era. The rise of the South, the emerging economies, and India's leadership role in SSC promise an alternative to archaic perceptions that are far removed from ground realities, and to the North and its tired leadership. Blocking the progress of BRICS will serve no real purpose for America or the attempts to create roadblocks for BRICS are born out of apprehensions of a challenge to the America-led world order, which is creaking under its own weight of contradictions. The independent non-dollar trade settlement system, which the BRICS is considering, may not be a reality soon, but it is born out of necessity, from the dollar's failure to meet the challenges and needs of the present era. The bilateral and multilateral economic, security, and strategic arrangements under the BRICS agenda need not necessarily hurt the interests of the US or any other grouping unless there is an established clash of interests, which in a highly globalised world would be detrimental for everyone play an important role in understanding the geopolitical and geo-economic dynamics of any given time. The decisions, economic or otherwise, the interpretations of meetings and events, and policy formulations made on flawed perceptions will lead to detrimental results. America and the rest of the Western world have to learn from past errors of judgement and look at the emerging institutions of the South, such as BRICS, from a new perspective. The shift is real – looking away cannot alter that reality.

Malaysian PM Anwar Ibrahim meets with Chinese FM Wang Yi
Malaysian PM Anwar Ibrahim meets with Chinese FM Wang Yi

Malaysia Sun

time13 hours ago

  • Business
  • Malaysia Sun

Malaysian PM Anwar Ibrahim meets with Chinese FM Wang Yi

Malaysian Prime Minister Anwar Ibrahim (R) meets with Chinese Foreign Minister Wang Yi in Putrajaya, Malaysia, July 11, 2025. /Chinese Foreign Ministry Malaysian Prime Minister Anwar Ibrahim on Friday met with Chinese Foreign Minister Wang Yi in Putrajaya. Chinese President Xi Jinping's successful visit to Malaysia this year marked a major event in the history of Malaysia-China relations, Anwar said, adding that Xi's deep concern for and reflections on the future of the world have earned the heartfelt respect of the Malaysian government and its people. The fruitful cooperation between Malaysia and China in various fields has benefited the people of both countries, Anwar said. In today's world, cooperation mechanisms such as BRICS are growing with remarkable momentum as countries pursue independence, autonomy and development, he said. China has played a leading role in this process, which Malaysia highly appreciates, Anwar noted. Under the joint guidance of the two countries' leaders, China-Malaysia relations have entered the best period in their history, said Wang, also a member of the Political Bureau of the Communist Party of China Central Committee. China regards Malaysia as a sincere friend and stands ready to work with the Malaysian side to implement the important consensus reached between the two countries' leaders and to advance the building of a high-level, strategic China-Malaysia community with a shared future in a steady and substantive manner, he added. He said China fully supports Malaysia's work as the rotating chair of ASEAN and in playing a greater role in regional and international affairs. As developing countries, emerging economies, and key representatives of the Global South, China and Malaysia should join hands to meet challenges and pursue revitalization and development together, Wang said. The United States' unilateral imposition of high tariffs is irresponsible and unpopular, Wang noted. He said China will always stand with the vast number of developing countries, remain committed to high-level opening-up, share the dividends of its super-sized market and work together to expand the pie of win-win cooperation. Source: CGTN

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