The recent BRICS summit in Rio de Janeiro was supposed to symbolize the emerging multipolar world, a collective of powerful nations rising to challenge the long-standing Western-dominated order. Yet within hours, U.S. President Donald Trump dropped a digital hammer: “Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff.”
In a striking recent escalation, the U.S. imposed a fresh wave of tariffs on several key trading partners, including long-standing allies such as Japan, South Korea and Brazil, while also issuing threats of similar actions against the European Union and Mexico. These moves are sparking growing diplomatic friction and injecting new uncertainty into the global economy. Amid these tensions, a notable trend is emerging: U.S. allies are increasingly exploring closer economic, and in some cases, strategic ties with China. While this shift doesn’t represent traditional alliance-building, it signals a pragmatic recalibration of foreign policy priorities in response to Washington’s protectionist turn. Recent talks between the Australian prime minister and Chinese leadership underscore this evolving dynamic, reflecting a broader rebalancing of global trade relationships.
The U.S. tariff policy has become increasingly ideological. The effective tariff rate on most Chinese goods remains above 30%. South Africa faces a 30% tariff, with other countries like Malaysia, Indonesia, Myanmar and Laos risking similar penalties if they don't strike deals with Washington by Aug. 1.
What these nations have in common isn’t always a trade imbalance; it is an alignment, real or rhetorical, with the BRICS call for alternative financial systems and de-dollarization. Why such hostility? Because the dollar is more than a currency. It enables a level of economic exceptionalism no other country can claim.
For decades, the dollar has enjoyed what former French President Valery Giscard d’Estaing once called an “exorbitant privilege.” Dollar dominance allows the U.S. to borrow cheaply, run massive deficits, and fund a global military presence. It enables sanctions regimes, dictates financial norms, and underwrites American living standards via cheaper imports and capital flows.
If the world moves away from the dollar, even gradually, the economic foundations of U.S. supremacy begin to erode. Even a slight interest rate hike on a multitrillion-dollar debt could cripple the federal budget.
The dollar’s share of global reserves has dropped to under 47% while gold now accounts for nearly 20%. Even the IMF provides data that speaks volumes: Its latest figures show the U.S. dollar's share in global foreign currency reserves fell to a record low of 57.8% by the end of 2024, the lowest since the IMF began tracking and a significant drop from its 70% peak in 2000. Central banks bought more than 244 metric tons of gold in the first quarter of 2025 alone, reflecting a strategic hedging effort. The World Gold Council's 2025 survey confirms this, with a remarkable 95% of respondents expecting their gold holdings to continue increasing.
BRICS is playing a central role in this shift, trading in their local currencies. Bilateral trade between Russia and China is now over 90% in rubles and yuan. The New Development Bank is expanding local currency lending. And the BRICS Cross-Border Payments Initiative – designed to rival SWIFT – shows a growing ambition to insulate member economies from dollar-based disruptions. At the recently concluded 17th BRICS summit in Rio de Janeiro, leaders formally decided to advance this initiative.
Though no single currency is poised to dethrone it overnight, the dollar’s gradual erosion is a trend every policymaker, business and American must watch.
Yet, despite this undeniable de-dollarization push and the ambitious rhetoric of the BRICS bloc, it doesn't automatically elevate them into a true multipolar challenge to U.S. authority.
The defining tension of our era remains the strategic rivalry between the U.S. and China. Other nations, even powerful ones like India or the European Union, often find themselves navigating this central dynamic, compelled to choose sides or at least carefully balance their allegiances.
“There are only two countries with the economic size, military might and global leverage to constitute a pole: the United States and China. Other great powers are nowhere in sight,” wrote Jo Inge Bekkevold, a senior China fellow at the Norwegian Institute for Defence Studies for Foreign Studies. Two years later, the gap has only widened according to the IMF.
Trump’s latest tariff maneuver dramatically underscores this bipolar reality. His executive action to extend "reciprocal" tariffs for most nations until Aug.1 (with the conspicuous exception of China) screams Washington's laser focus on Beijing.
While proponents might highlight the collective GDP of BRICS or its expanding membership, the reality on the ground paints a different picture. China alone accounts for nearly half of BRICS’ GDP in purchasing power parity terms, with 19.6%. According to the IMF, 70% of Brazil’s exports to BRICS go to China. This isn't multipolarity, it's asymmetry.
China’s dominance extends beyond GDP and trade. It also controls critical strategic sectors vital to modern economies and security. Notably, China commands a near-monopoly on rare earth elements, essential for manufacturing everything from smartphones to advanced military technology. This control gives China significant leverage in global supply chains and geopolitical negotiations.
The U.S. response – imposing tariffs and seeking to diversify supply sources – underscores the recognition of this power. The ability of China to negotiate and influence these critical sectors reflects its growing clout in the global system and is a clear sign that China is very much a formidable pole in the emerging bipolar order.
The current global order remains predominantly unipolar, with the United States and the U.S. dollar holding dominant economic and military influence. However, the world is gradually moving toward a bipolar structure because China stands out as the only BRICS member with the economic size and potential military capacity to seriously challenge U.S. supremacy.
While the BRICS countries are often discussed as a collective force, it has no unified response to U.S. tariffs, no collective trade policy, and no common vision for economic integration. Its members span a broad political spectrum – from democracies like India and Brazil to authoritarian regimes like Russia and China. It is not the European Union. It is not even ASEAN.
This bipolarity, however, doesn't make the rest of the world irrelevant. The challenge for nations caught between these giants is how to assert agency without becoming collateral damage. For middle powers like India, Indonesia or Brazil, the goal is to navigate this new Cold War-style dynamic with enough dexterity to pursue their own development, security and strategic interests without being forced to choose sides.
These countries are not lining up behind a single flag, red or blue. Instead, they are seeking room to maneuver, to secure growth, investment and regional stability without being drawn too deeply into a bipolar rivalry. Whether through hedging, non-alignment or quiet diplomacy, many are now investing more in resilience than in ideology.
For policymakers and investors, the signals are clear. Despite the rise in de-dollarization rhetoric, the world’s monetary and strategic architecture remains firmly dollar-centric – and therefore U.S.-centric. Tariffs are just one way that Washington reminds the world of that reality.
Until there is a truly credible alternative currency, one that is liquid, convertible and backed by robust, independent institutions, the unipolar world order is not going anywhere. China may someday build that alternative. For now, it remains the only country that might.
