After welcoming four new members in 2024, BRICS now has 10 member countries, following Indonesia’s official accession as a full member. Brazil, which currently holds the rotating presidency of the group, announced this on Monday, January 6, 2025. Brazil congratulated Indonesia and described its decision to join BRICS as a strategic move full of potential. With the right strategy, Indonesia can leverage this membership to strengthen its economic position and play a greater role on the global stage.
In addition, Indonesia’s membership is viewed as an effort to anticipate the domestic impact of President Donald Trump’s policies in the future. It is important to consider that past experiences have shown the international commitments made by the President of the United States to be unpredictable. The Western world, under the shadow of Trump, is once again filled with uncertainty in the global context, especially during his upcoming term of leadership.
Furthermore, this membership serves as evidence of Indonesia’s ongoing efforts to strengthen its position in international cooperation. With the largest population and economy in Southeast Asia, Indonesia shares a commitment with other member countries to reform global governance institutions and contribute positively to deepening South-South cooperation. As a nation with a growing and diverse economy, Indonesia is dedicated to actively contributing to BRICS’ agenda, including promoting economic resilience, technological collaboration, and sustainable development.
Under President Joe Biden’s administration, the US has largely downplayed the significance of the BRICS coalition, a 10-member group of emerging markets. In a press briefing last October, White House National Security Communications Advisor John Kirby stated that the U.S. does not consider BRICS a “threat.” However, this stance may shift as Donald Trump prepares to take office. Early signs suggest he could impose tariffs on BRICS member nations if they undermine the U.S. dollar.
A notable policy change under the incoming Trump administration is its explicit focus on BRICS as a unified entity. In recent years, BRICS countries have intensified efforts to reduce their reliance on the US dollar in international trade. They are striving to use their respective currencies to diminish the dollar’s dominance in the global economy. Meanwhile, Trump has threatened to impose a 100% tariff on BRICS nations if they proceed with creating a new currency. He also stated that any country attempting to replace the US dollar in international trade would face the loss of economic ties with the US.
In that regard, Indonesia has already established Local Currency Transaction (LCT) agreements with several countries, including Malaysia, Thailand, Japan, China, Singapore, South Korea, India, and the United Arab Emirates (UAE). However, these agreements are only at the implementation stage with Malaysia, Thailand, Japan, and China. Currently, the Indonesian government is working to finalize LCT frameworks with Singapore, South Korea, India, and the UAE, aiming for implementation to expand the impact of the initiative.
M. Rizal Taufikurahman, Head of Macroeconomic and Financial Center at Indef, commented that Trump’s threat to impose 100% tariffs on BRICS nations if they abandon the U.S. dollar in international trade could lead to global economic instability. Such tariffs would make BRICS products, including Indonesia’s, more expensive in the U.S. market, reducing their export competitiveness. The consequences could include a decline in foreign investment, disruptions in global supply chains, and significant pressure on domestic economies, particularly in sectors reliant on trade with the US.
For Indonesia, this threat is particularly concerning due to its potential impact on key export revenues from products such as textiles, electronics, and other manufactured goods. Indonesia’s reliance on the U.S. market makes these tariffs a significant risk to economic stability. As of November 2024, Indonesia’s export share to the U.S. was substantial at 10.33%. Moreover, the U.S. was the largest contributor to Indonesia’s non-oil and gas trade surplus during that period, amounting to $1.58 billion.
However, Duncan Wrigley, Chief China+ Economist at Pantheon Macroeconomics, expressed skepticism about the likelihood of the U.S. implementing punitive 100% tariffs on BRICS countries. He argued that the bloc’s size makes such a move improbable, as it could push neutral nations in the U.S.-China rivalry toward Beijing, ultimately jeopardizing U.S. strategic interests. Furthermore, China has already begun implementing a zero-tariff policy for the least developed countries that maintain diplomatic ties with Beijing.
Regardless, both the government and businesses should engage in scenario planning to mitigate risks, seize opportunities, and prepare for worst-case outcomes, such as significant reductions in export volumes or increased costs due to tariffs. The Indonesian government should prioritize proactive trade diplomacy and strategic partnerships to address potential risks. Engaging in negotiations with the U.S. to clarify the scope of any tariffs and advocating for exemptions on key Indonesian products are crucial first steps.
For businesses, the immediate priority is to diversify markets. Companies should explore opportunities in regions such as Africa, the Middle East, and Southeast Asia, where trade agreements may be more favorable. Within BRICS, businesses can pursue trade opportunities, joint ventures, and investments to strengthen their presence in member countries. Collaboration with industry associations and government agencies will also be vital. By advocating collectively for supportive policies, businesses can ensure their interests are represented, while accessing resources and guidance to navigate potential challenges.
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