These countries need to rethink the prohibitive tariffs they place on each other
Many themes are on the minds of the political leaders attending the Brics Summit in Brazil, but one aspect that is certainly important for all is easing trade friction in this group. For the long-term sustainability of Brics, there must be a stronger economic ambition that ties the grouping together beyond its political and geopolitical alignments.
Across all Brics countries, researchers, policymakers and business people have been attempting to adapt and address the restrictions caused by the United States Liberation Day tariff. There remains profound uncertainty about the path ahead, as the 90-day pause comes to an end this coming week.
What the Brics countries have not reflected on is the prohibitive tariffs they place against each other, which limit intra-Brics trade.
The blame, while correct, cannot be placed solely on the US for its higher tariffs; the Brics countries should also consider taking a serious look inward and assess how they could deepen intra-trade and increase investments.
The ideas of this path have long been documented in the business arm of this grouping, the Brics Business Council Forum, in its various annual reports. Still, few of these ideas have made their way into the political groupings’ resolutions in a manner that changes the economic engagement landscape among these countries. The current environment necessitates such a strong approach.
Consider the South African agricultural sector, which, because of the lack of a trade agreement, faces higher tariffs in Brics member countries. Take China as an example; South Africa’s macadamias face a 12% import tariff and the wine industry tariffs of 14% to 20%. In addition to higher tariffs, exporters also face phytosanitary barriers. I am singling out China here, but the same can be said about India, another major agricultural importer in Brics.
For South Africa, agriculture is one of the key strategic industries for driving economic growth and revitalising rural communities. Notably, the sector cannot grow robustly without an expansion into new export markets. Already, the South African agricultural industry exports roughly half of its produce in value terms, amounting to about $13.7 billion in 2024.
But the Brics countries account for a small share of these exports. Roughly two-thirds of South Africa’s agricultural exports go to the African continent and the European Union.
While China has signalled optimism and an intention to lower import tariffs for various goods from Africa, there is no demonstrable evidence of the actual path of implementing this, along with the timelines. Currently, it primarily serves as a political statement.
The Brics grouping should build on these political statements, and argue for a proper framework that technocrats and business can start refining, which can be launched at the next summit in India as the Brics trade agreement. This would encompass the agricultural sector, as this grouping is a big market, accounting for roughly half of global agricultural imports, but filled mainly by non-Brics members.
The US authorities’ tough trade stance necessitates this approach to trade policy, which will allow Brics countries to expand the avenues for trade for their domestic businesses and alleviate the friction in this grouping.
This economic ambition of deepening trade is vital for the long-term sustainability of Brics.
Wandile Sihlobo is the chief economist of the Agricultural Business Chamber of South Africa (Agbiz).