BRICS leaders shrug off Trump additional tariff threat

Leaders of the BRICS nations committed to development of critical minerals supply chains on a "benefit-sharing" basis at their Rio de Janeiro summit July 6 , while shrugging off US President Donald Trump's threats to impose additional 10% import tariffs on countries adhering to BRICS "anti-American policies."

BRICS nations hold significant critical minerals reserves and need to collaborate via private-public partnerships to create processing facilities to develop this sector, Brazilian President Luiz Inacio Lula da Silva said at the opening of the BRICS business forum which preceded the group's heads of state summit.

BRICS has expanded to an 11-nation block, grouping Brazil, Russia, India, China, South Africa, Saudi Arabia, Egypt, United Arab Emirates, Ethiopia, Indonesia and Iran. Belarus, Bolivia, Kazakhstan, Cuba, Nigeria, Malaysia, Thailand, Vietnam, Uganda and Uzbekistan are partner countries.

The member nations possess 84% of the world's reserves of rare earths, 66% of its manganese and 73% of its graphite, Lula noted.

"Together with the private sector, let's firm up our participation in all stages of [critical minerals] supply chains," Lula urged the business forum. "Brazil is well-positioned to contribute with its trained workforce and clean energy."

According to the International Energy Authority, demand for critical minerals is set to triple by 2040, Lula noted.

Lula and government representatives discussed specific cooperation in mining during the forum with Vietnam's Prime Minister Pham Minh Chinh and Ethiopia's Prime Minister, Abiy Ahmed Ali.

Discussions also took place on the possibility of setting up a Mercosur-level accord with UAE, Brazilian government sources reported.

At a parallel meeting on China-Brazil relations, Zhou Mi, senior researcher at Beijing-based Institute of American and Oceanian Study, told S&P Global Energy that Brazil's membership in Mercosur is a drawback to some China-Brazil trade arrangements, as China needs to offer similar terms to all Mercosur nations when completing negotiations with Brazil.

Mercosur is a trade zone comprised of Brazil, Argentina, Uruguay, Paraguay and Bolivia.

BRICS countries account for close to 40% of global GDP, a quarter of global trade and investment flows and nearly half the world's population, according to data given at the event.

Local currencies usage

While not formally advocating creation of a single alternative trading currency to the US dollar, the summit reinforced a commitment in a final statement to the use of local currencies within the block, prompting President Trump to threaten late July 6 to impose an additional 10% import tariff on BRICS nations' products.

Representatives of China, India, South Africa and Malaysia at the summit shrugged off this threat, conveying the message that cooperation between BRICS is not directed against third countries. However, all major metals fell in early LME trading July 7.

Late last year Trump had threatened imposition of 100% tariffs on imports into the US of products from BRICS countries should they use alternatives to the US dollar in international trade.

BRICS' declaration, entitled Strengthening Global South Cooperation for a More Inclusive and Sustainable Governance, states the group will deepen its discussions on the use and expansion of intra-BRICS payments in local currencies and use of these currencies in investments.

BRICS "recognises progress has been made on identifying possible pathways to support continuation of discussions on the potential for greater interoperability of the BRICS Cross-Border Payment Initiatives," the group's finance ministers separately stated.

The BRICS leaders stated they "condemn the imposition of unilateral coercive measures that are contrary to international law, inter alia in the form of unilateral economic sanctions and secondary sanctions," expressing "serious concerns with the unilateral imposition of trade and tariff-related actions, including the raising of tariffs and non-tariff barriers which distort trade and are inconsistent with WTO rules."

The leaders pledged in their final statement "to continue to cooperate with a rules-based multilateral trading system with the WTO at its core," being committed to a WTO dispute settlement system, and strongly supporting Ethiopia and Iran's bids for accession to the WTO.