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- Avoid tariffs: Russian GDP growth slows below 2% due to Trump's tariffs against BRICS
Avoid tariffs: Russian GDP growth slows below 2% due to Trump's tariffs against BRICS
The growth of the Russian economy will slow down to 1.5–1.7% this year due to Donald Trump's duties against the BRICS, according to the consensus forecast of Izvestia. On July 6, the US president threatened 10 percent tariffs on all countries that support the unification policy. Russia will not receive direct damage from Washington's actions, but duties may slow down energy trade — as a result, this will reduce Russian budget revenues from exports and weaken the ruble. The pressure from Trump began against the background of the BRICS summit, which criticized American policy. How the escalation of trade wars can affect the Russian economy is described in the Izvestia article.
Trump's Trade War against BRICS
Russia's GDP growth in 2025 will slow down to an average of 1.5–1.7% against the background of new foreign policy risks, analysts polled by Izvestia believe. The reason is the trade duties against the BRICS countries, which were announced by US President Donald Trump. On July 6, he promised to impose a 10 percent tariff on all states that "support the anti-American policy" of the organization.
BRICS is an association of Brazil, Russia, India, China and South Africa, which appeared in June 2006. At the Johannesburg summit in 2023, six more countries were invited to the bloc, but Argentina refused to participate after Javier Miley came to power, and Saudi Arabia has not yet decided on a decision. In 2023, Egypt, Ethiopia, Iran and the United Arab Emirates joined the group, and Indonesia joined the organization in early 2025.
— Back in January, the newly elected president of the United States threatened BRICS with duties for abandoning the dollar, but then he called Spain a member of the bloc, which has nothing to do with this association. This means that all the threats against the BRICS have not been thought out enough," Natalia Milchakova, a leading analyst at Freedom Finance Global, recalled.
According to the American administration, BRICS is a mechanism that will strengthen the negotiating positions of the organization's member countries regarding a new trade agreement with the United States, said independent expert Andrei Barkhota. They can redirect export flows from America to the markets of the countries of the association — this can make them partly less vulnerable to Washington's trade claims.
However, Trump's extra duties are primarily aimed at the main BRICS members — China, India and Brazil, the expert believes. He added: in the future, tariffs may extend to South Africa and African countries, and then to the rest of the association's members.
The declaration of the BRICS 2025 countries, which was signed during the organization's summit in Rio de Janeiro, notes concern about the growth of tariff and non-tariff measures by the United States. According to the document, they do not comply with WTO rules and "threaten to further reduce global trade and disrupt global supply chains."
A new round of trade wars began with the return of the American leader to the White House. After his re-election, Trump promised to introduce trade fees: on April 2, the president announced the introduction of import duties against 185 countries. The base rate is 10%, but it is higher for individual countries, such as the EU or some products from Canada and Mexico.
However, on April 9, the collection of fees for most states was postponed for 90 days — the states decided to negotiate. This has affected almost everyone except China.: with him, the "trade truce" began to operate only on May 12 for the same three months. In addition, duties on goods from China were reduced from 145% to 30%.
What will happen to the Russian economy in 2025
Despite the fact that Russia is a member of the BRICS, the direct effect of Trump's duties on the country will be small, because trade between Moscow and Washington is already minimal due to sanctions, Andrei Petrov, director of work with wealthy clients at BCS World Investments, drew attention. By the end of 2024, it amounted to only $3.5 billion, the lowest since 1992.
Any trade wars provoke a decrease in global demand and increased uncertainty, which already leads to lower prices for raw materials, the expert believes.
Although by July, Brent quotes had regained some of their losses (on July 7, it was trading at $68.6 per barrel), overall, energy prices have fallen by a quarter since the beginning of the year. Because of this, the Ministry of Finance has already tripled its budget deficit forecast to 3.8 trillion rubles. This is due to the fact that the cost of raw materials will be cheaper due to a stronger ruble. So, since the beginning of the year, the Russian national currency has strengthened by almost 25%.
Despite this, the dollar may continue to weaken against the ruble, because due to trade wars, investors are actively selling their American assets, says economist Andrei Barkhota.
Nevertheless, Russian GDP will slow down this year in any case due to trade wars - it will not exceed 2% by the end of 2025, experts polled by Izvestia believe. For comparison, the Ministry of Energy expects 2.5%. The Finance Ministry also expects lower indicators — according to the head of the department Anton Siluanov, the economy will grow by only 1.5–2% this year.
How will trade between the EU and China change due to trade wars
The tariff war is developing not only against the background of Donald Trump's statements — Europe also plans to intensify the trade confrontation with China. For example, French Finance Minister Eric Lombard said that the eurozone countries should impose duties and resist Chinese imports, which can damage local industry.
China, in turn, has restricted the import of medical equipment, which consists of at least 50% European-made components. Since July 4, China has increased duties on spirits from the EU by a third — the largest increase affected the French companies Hennessy (almost 35%), as well as Remy Martin (about 34%) and Martell (about 28%).
China is the largest supplier of industrial and consumer goods to Europe, said Dmitry Kuznetsov, an economist at the Presidential Academy. According to him, Beijing sells products to Europeans from electronics and machines to components for "green" and digital transformation. The EU, in turn, supplies luxury goods and a number of food products to China.
— The European Union continues to shoot itself in the foot with maniacal persistence. The bloc has already shot itself one by ending its partnership with Russia — many European enterprises have already fled to countries where energy resources are cheaper. Now Brussels is going to do the same with the other leg in the form of cooperation with China, on which the EU is critically dependent," said Natalia Milchakova from Freedom Finance Global.
Thus, both sides will lose from the continuation of trade wars: the EU will lose access to cheap green technologies, and China will lose access to the premium market, Andrei Petrov from BCS World of Investments believes. At the same time, according to Natalia Milchakova, as a result of the confrontation, the European economy will face industrial decline and chronic stagnation. The EU's GDP growth this year risks being near zero.
For China, the new EU duties are also a loss, because it will be difficult for it to find new trading partners, Natalia Milchakova noted. However, China will not lose much — it has its own market, as well as the opportunity to supply goods to Russia and the BRICS countries, with which Beijing will not refuse to cooperate even against the background of new US duties.
Переведено сервисом «Яндекс Переводчик»
