Impact of BRICS Nations on the U.S. and Global Trade Dynamics

This report provides an in-depth analysis of the BRICS countries (Brazil, Russia, India, China, and South Africa) and their growing influence on the U.S. economy and global trade dynamics. The report begins with an executive summary highlighting the importance of BRICS nations and the challenges they pose to the U.S. economy. It then delves into the economic, political, and social aspects of these countries. The report examines the relationship between China and Brazil, emphasizing its impact on the world economy. It also evaluates the overall influence of BRICS on the U.S., including the challenges to the U.S. dollar's dominance and the emergence of the New Development Bank. The report concludes by summarizing the key findings and implications of the BRICS' rise for the U.S. and the global economic landscape. The analysis draws on various economic indicators, trade data, and expert opinions to provide a comprehensive understanding of the subject.

Running head: ANALYZE GLOBAL TRADE ENVIRONMENTS
Analyze Global Trade Environments
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Executive Summary:
BRICS is the acronym of five countries, viz., Brazil, Russia, India, China and South Africa.
With emerging economies, those countries have captured significant importance in the world
economy. As a result, western countries, especially the U.S, are facing threats from those
countries. Hence, it is important to analyze the impact and the influence of BRICS on the U.S
and also a brief overview about the economical, political and social aspects of those
countries.

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Table of Contents
Introduction:...............................................................................................................................3
The influence of BRICS countries on the U.S:..........................................................................3
The relationship between China and Brazil:..............................................................................5
The impact of China-Brazil partnership on the world economy:...........................................6
Evaluation of BRICS:................................................................................................................7
The impacts of BRICS on the U.S:............................................................................................8
Conclusion:................................................................................................................................9
References:...............................................................................................................................10

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Introduction:
BRICS consists of five major economies, viz. Brazil, Russia, India, China and South
Africa. At present, with developing economic conditions, each country is playing a vital role
in the era of advanced economics. Those countries, with their new and advanced
methodologies, have earned enough potential to dominant the global economy by the year
2050. With 25% land coverage and 40% population of the world, BRICS is going to be the
largest entity in every stage of global economic activities (Carey & Li, 2016). For instance,
Brazil, Russia, India and China have already captured a significant portion in the world
market with their largest and fastest-growing market strategies. Hence, to understand the
impact of BRICS in the world economy, especially on the United States, it is beneficial to
analyze briefly the economical, political and social activities of those countries at first
(Rasoulinezhad & Jabalameli, 2018). By doing so, this report can focus on various
opportunities and threats, based on international business environment, which can be
influenced by those multi dimensional factors. In this context, the report is going to focus on
the relationships between China and Brazil and their impacts in the global market.
The influence of BRICS countries on the U.S:
The economic conditions of various western countries have decreased since 2010,
while four major countries are capturing the topmost positions worldwide. According to some
economists, the United States is going to be the second largest economy in the world after
China in upcoming years (Armijo & Roberts, 2014). By considering the emerging trend of
China’s GDP, they forecast that the country can achieve the equivalent level with the U.S.A
by 2027 and after that, the GDP of China is going be increased more steadily. Moreover,
considering the prediction of the World Bank, it can be stated that the U.S dollar (USD) is
losing its international dominance by 2025 because of the Renminbi of China (Stuenkel,

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2014). Hence, in the future, the world market can be dominated by a multi-currency system
as the value of the Renminbi is going to be equal with the dollar and the euro.
Figure 1: Comparison of GDP of some major countries
Source: (Berardi, 2017)
It can be stated from the above diagram that the GDP of China is increasing sharply
and by 2050, the country can earn the highest GDP, all over the world. In India, Russia and
Brazil, these trends are also increasing significantly. On the other side, The U.S, the U.K and
other western countries are facing a slow trend of GDP. Hence, by 2010, China has already
become the second largest economy in the world by surpassing Japan. By 2025, China can
equate its GDP with the U.S while, the rest of the country of BRIC can equate their GDP with
other major western countries in the world. In 2010, the U.S has experienced a current
account deficit worth $470 billion, while, at the same time, China has gained a surplus worth
$305 billion (Doyle, 2014). This sharply indicates that, China is facing an advantage
regarding its current account balance, which can help the country to develop further. In
addition to this, it is crucial to discuss that, average rate of consumption of the U.S over the

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past decade, is greater compared to that of China. In other words, China is accumulated
savings by a large amount compare to that of the U.S, for the last decade (Berardi, 2017). As
a consequence, China has contributed a huge portion of its surplus amount into the sovereign
wealth funds and has purchased American treasuries as the U.S has piled up huge amount of
public debt. Hence, by its major political and economical power, China has helped the U.S to
overcome from its recession period.
Irrespective of China, other countries of BRICS have also influenced the U.S and
other western economies by their socio-political and economical aspects. India and Russia,
through their innovative technology and foreign trade policy, have influenced the economic
conditions of the U.S. Thus, by capturing the international market through export and import
and huge consumption power, BRICS is going to control the economic conditions of almost
all major countries.
The relationship between China and Brazil:
To understand the impact of the growing powers of BRICS in the international market
and their control on world trade, it is beneficial to analyze the interrelationship among those
countries. By explaining the relationship between China and Brazil, it can be understood that
whether emerging power of those countries are challenging for the U.S from global
perspective or not and their receptiveness to liberal international norms.
China, after becoming the largest trading partner with Brazil, has possessed an
emerging political and economical relationship with that country since 2009 (Andreff, 2016).
Through the bilateral trade, both countries have earned huge amount of revenue. Brazil has
exported agricultural products and raw materials to China and imported manufactured items
from that country. Moreover, by investing large amounts of money on various fields like
mining, energy, oil and steel industries, China has helped Brazil to take various strategic

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approaches. This, in turn, helps China to expand their business on Brazil and enhance
interdependency between them. Due the sharp increase in GDP, the demand for commodity
in China has also increased rapidly, which in turn, has helped the international price level to
increase. As Brazil exports primary products to China and all other countries, this increasing
price level has positively affected the country by obtaining surplus through trade-balance.
However, during the economical crisis in 2008, the economy of China has faced various
imbalances, for which, the GDP growth of Brazil has decreased (Yuan, Rao & Shi, S2017).
Due to this economical slowdown of China, various major sectors of Brazil has affected
adversely. However, Brazil has faced two opposite consequences during the export of iron
ore and soybean (Oliveira & Schneider, 2016). On the one hand, China has decreased their
imports of iron ore from Brazil and on the other side, they have increased their imports of
soybean form that country.
The impact of China-Brazil partnership on the world economy:
This relationship between China and Brazil is vital because of their different political
and economical conditions. China is possessed a planned economy while that of Brazil is
democratic. Hence, by analyzing the partnership of this opposite economies and their impacts
in the world market, the concept of a strategic business plan can be described (Wilkinson,
Wesz Jr, Lopane & Muniz, 2015). China has shown that their economic condition is strong
enough to influence the international price level, which in turn, can influence international
trade activities of other countries. However, at the same time, by making a good trade relation
with Brazil, China also has proved that their enhancing economy is not negatively influence a
country.

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Evaluation of BRICS:
BIRCS do not make any economic bloc or trading association like other western
countries. However, there are some factors that can influence four major countries of BRICS,
viz, Brazil, Russia, India and China to form a political alliance.
China is defined as the leader among all countries of BRICS and therefore, it enjoys
the effective votting power for taking any initiatives regarding BRICS. Thus, by possessing a
large share in international markets, China has obscured the rest of the country of BIRCS
through socioeconomic and political aspects (Shahrokhi et al., 2017). Moreover, China’s
official foreign reserve holdings, through exports, are double compare to combined reserves
of other countries of BRICS.
The supremacy of India and China as major producing country with unutilized
potential has been recognized significantly. However, according to some economists, large-
scale disregard of China and Russia, for democracy and human rights, can increase problem
in the future (Sergunin, 2015). On the other side, population growth of Russia, China and
Brazil have decreased significantly, which in turn, has decreased the labor force on those
countries. Brazil has also shown their economic potential in recent years and consequently,
the country has built a framework of economical, political and social policies. Those policies
have helped the county to develop consistency.
On the other hand, India has been facing some politically disturbance situation due to
its neighboring countries. India and China has a huge number of populations compare to
other countries, worldwide. However, most of the population in those countries belongs to the
low income category (Lima, Zuppani & Maclennan, 2017). This economical obstacle has
adversely affected those countries to achieve significant growth through limited policies of
the government, unstable social and political conditions and limited demands in domestic

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markets. Hence, the only instrument by which BRICS can dominant the world economy in
the future, is their emerging international market.
The impacts of BRICS on the U.S:
Emerging power of BRICS has built up various challenges for the U.S, who has
remained the leader in the world economy. By sharing various relevant attributes, Brazil,
Russia, India and China have gathered power through economical, military and political
means that can influence their domestic markets as well as international markets (Bekiros,
2014). For decades, the dollar has remained the world currency. However, according to the
new agenda of BRICS, those countries are forming the New Development Bank to finance on
various sustainable projects of the development and financial infrastructure. This bank is
going to be the major competitor of the International Monetary Fund (IMF). The chief goal of
this bank is to eliminate the dollar as the dominating currency in this world. For this, the U.S
dollar can loss its value in the future and this can inversely affect the economic condition of
the U.S. from being the world’s largest economy. Moreover, the U.S has provided military
security and has provided support to various countries in international economic affairs. The
country has also enjoyed some benefits in international trade for the USD, as most of the
international transactions have done through this currency. Hence, all countries have kept
foreign reserves of this for currency in their domestic economy. However, this leading power
of American currency can be changed due to the development of the financial institution of
BRICS and this can adversely affect the position of the U.S in international markets. The
IMF can control this situation by maintaining its strong position as the chief financial
institutions in the world.

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Conclusion:
At the end of this report, it can be concluded that Brazil, Russia, India, China and
South Africa are potentially emerging their market in the world economy and this growing
trend can influence the economic condition of the U.S, adversely. China is playing the
leading role among all countries of BRICS by its enhancing trend of gross domestic product
(GDP) and a large share in international markets. Its strong position in the international
market can influence the political and economical decisions of other countries, as well. For
instance, the economic condition of Brazil has increased positively after making a bilateral
trade relationship with China. The rest of the country of BRICS is also gathering power to
influence the world economy, especially the world’s largest economy, that is, the U.S, with
their leading business strategies.

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References:
Andreff, W. (2016). Outward foreign direct investment from BRIC countries: Comparing
strategies of Brazilian, Russian, Indian and Chinese multinational companies. The
European Journal of Comparative Economics, 12(2), 79-131.
Armijo, L. E., & Roberts, C. (2014). The emerging powers and global governance: why the
BRICS matter. Handbook of emerging economies, 503-520.
Bekiros, S. D. (2014). Contagion, decoupling and the spillover effects of the US financial
crisis: Evidence from the BRIC markets. International Review of Financial
Analysis, 33, 58-69.
Berardi, U. (2017). A cross-country comparison of the building energy consumptions and
their trends. Resources, Conservation and Recycling, 123, 230-241.
Carey, R., & Li, X. (2016). The BRICS in International Development: The New
Landscape (No. IDS Evidence Report; 189). IDS.
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Lima, L. C., Zuppani, T. D. S., & Maclennan, M. L. F. (2017). Human Resource
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Grande), 18(3), 69-82.
Oliveira, G. D. L., & Schneider, M. (2016). The politics of flexing soybeans: China, Brazil
and global agroindustrial restructuring. The Journal of Peasant Studies, 43(1), 167-
194.

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Integration Patterns?. Journal of Economic Integration, 33(1), 1011-1045.
Sergunin, A. (2015). Understanding Russia’s policies towards BRICS: theory and practice.
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