Brics leaders meet under pressure from tariffs, oil shocks and climate rifts

Brazil's President Luiz Inacio Lula da Silva and former Brazilian president and president of the New Development Bank Dilma Rousseff during the Brics summit in Rio de Janeiro, on July 4. AFP

When the leaders of the Brics group of developing countries gather on Sunday for their 17th annual summit, the backdrop is one of the most geopolitically volatile the bloc has faced in years, with trade tension, regional conflicts and energy instability all converging at once.

Three forces will shape the mood in the room at the two day summit. First, US President Donald Trump’s “liberation day” tariff blitz, which has landed across the Brics. China struck a trade truce with the US recently, reducing steep levies. But India still faces duties of up to 27 per cent on exports bound for the US, while South Africa is grappling with a 31 per cent levy. Brazil has been hit with a 10 per cent baseline tariff.

Markets lifted by hopes of trade deals with the US

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While these measures were paused for 90-days, that window closes on July 9, so the threat of fresh trade disruption looms large.

Wars and oil

Second, there’s the instability in the Middle East, following a 12-day war between Israel and Iran. Oil markets have already felt the impact: Brent, the benchmark for two thirds of the world's oil, surged nearly 12 per cent after Israel’s mid-June strike, driven by fears that further escalation could disrupt ships carrying oil through the Strait of Hormuz.

Prices have since cooled, but the stakes remain high. Any new conflict would hit oil importers, such as China and India, while a plunge would hit revenue for major Brics producers such as Russia and Brazil.

That brings us to the third pressure point: the upcoming Opec+ meeting in Vienna on July 10. Russia remains a key player in the oil cartel, shaping production policy in tandem with Saudi Arabia, which is not a Brics member.

Brazil joined Opec+ last year, although without binding production targets, while India and China (as major importers) closely watch the cartel’s quota decisions, which influence global prices. Yet in practice, most Brics members are still price-takers rather than setters, highlighting the bloc’s internal imbalance and its limited influence over global energy governance.

Climate policy adds another layer of friction. While the EU continues to press for faster emissions cuts, the US has retreated from climate leadership under Mr Trump. Within Brics, positions vary: Russia is intent on protecting its fossil fuel revenue, while Brazil, India and China favour a more gradual transition that aligns with their development needs.

Diverging views on climate policy point to a broader issue facing Brics: as the bloc positions itself as a champion of a more “balanced” or “multipolar” global order, how much actual influence does it have?

Global impact

Comparisons with the G7 — the bloc of industrialised nations that continues to shape global policy — are hard to avoid, given Brics’ efforts to position itself as a voice for emerging economies. Yet, the group has struggled to match the G7’s coherence or influence on the global stage. For example: China generates about 70 per cent of the original bloc’s economic output, meaning the now expanded group (which includes Egypt, Ethiopia, Iran and the UAE) lacks the scale and co-ordination needed to match the G7 in any meaningful way.

Divisions within the bloc are not confined to economics either; they extend into diplomacy and security as well. The Middle East remains a key source of tension. Russia has taken a more assertive diplomatic line in support of Iran, particularly during its recent standoff with Israel. But other Brics members, especially India and Brazil, are likely to proceed with caution, unwilling to risk damaging relationships with the US and other western partners that are vital to their economic interests.

With such differing interests, a unified stance on geopolitical crises, economic coordination, or energy policy remains unlikely. The summit is likely to deliver broad, cautious statements rather than any meaningful joint strategy.

De-dollarisation?

That same fragmentation is reflected in Brics’ push to move away from dollar dependence — not by replacing the US currency altogether, but by reducing exposure to western-controlled financial systems. The broader aim of so-called de-dollarisation is to create alternative frameworks for trade and reserves that are less vulnerable to sanctions and less reliant on payment networks like SWIFT.

However, de-dollarisation remains a distant goal. China’s renminbi is still closely managed against the greenback, the Russian rouble lacks stability, and currencies such as the Brazilian real and South African rand have little international traction.

The idea of a shared BRICS currency has been raised by some leaders, but it remains more symbolic than substantive. With no common fiscal framework or monetary co-ordination among members, even developing a unified trading platform would face big obstacles.

One area where Brics countries can make meaningful progress is at home. As global co-operation weakens, the way countries compete is changing. Strength now comes not only from what they sell abroad, but from the institutions they build and the connections they maintain with nearby markets.

In a fragmented world, countries that combine domestic strength with access to nearby markets are holding up best. Switzerland tops the IMD World Competitiveness Ranking not only for its internal stability, but because it trades freely with the EU next door. Singapore, too, thrives not in isolation but by anchoring itself in South-East Asia’s regional economy.

For Brics, the deeper challenge is coherence. In a world drifting towards bilateralism, the group’s ability to act with one voice remains in doubt. These tensions are not theoretical. The Iran crisis will test its diplomatic unity. Trump’s tariffs will test its economic resolve. Opec+ will test its energy co-ordination.

The Brics summit arrives, then, with limited expectations. The real test is not the declarations made this weekend, but the degree to which these countries can shape — rather than simply react to — the emerging world order.