G7 vs BRICS: Lose Lose.

By Shlomo Maital  

        As Donald Trump prepares to be inaugurated as US President on January 20, a rather bleak picture emerges of a wrestling contest between two teams: BRICS and G7. And it will not end well, at least not initially.

         BRICS is the group of anti-US anti-West countries: Brazil, Russia, India, China, South Africa.  According to recent figures, their total Gross Domestic Product, measured by the true dollar value of their currency rather than the distorted market value, is $62 trillion.  

          Facing off against them is the G7:  the group of pro-West economies led by the US.  Their GDP comes in total to $53 trillion. (Note:  China’s GDP, in $, is $33 trillion, more than $4 trillion above that of the US, at $29 trillion). 

         Together, these two groups command $120 trillion of the world’s $138 trillion GDP. 

          Trump plans to impose tariffs, including on key trading partners such as Canada and Mexico.  They and others will doubtless retaliate.  This will reduce the volume of world trade, which since the 1944 Bretton Woods agreement has made many poor countries much wealthier. 

          We have seen this movie before.  In the 1930’s Depression, the US imposed a heavy tariff on imports, the Smoot-Hawley tariff,  and its trading partners retaliated.  In just a few years, world trade all but disappeared, making the Depression worse for all. 

          Somehow, humanity seems to have to relive its mistakes again and again, and relearn their consequences.  “I can make you poorer, at my expense,” says country A,  and country B says, “so can I”. 

           And they’re both right.