The United States can survive the disorder it creates because the countries carrying its cost cannot print dollars, release American reserves or vote in American elections.
At a filling station in Metro Manila during the final week of March 2026, the number beside regular diesel reached 140.20 pesos a litre. Before the United States and Israel began bombing Iran on February 28, the same fuel had sold for between 48 and 73.61 pesos. The Philippine government declared a national energy emergency, gave motorcycle-taxi and public-transport drivers 5,000 pesos each, and asked Tehran for safe passage through the Strait of Hormuz. The missiles had not launched from Manila and the drivers waiting to buy fuel had no influence over the war and yet, within four weeks, Washington’s decision had doubled the price of the commodity that allowed them to work.
The same transaction appeared in different currencies across Asia. Pakistan raised petrol by 55 rupees a litre on March 7, then kept a cabinet committee in daily session to count incoming cargoes. Vietnam removed import tariffs on petrol, diesel and aviation fuel, urged businesses to let employees work from home, and watched petrol rise by 32 per cent and diesel by 56 per cent in less than two weeks. Bangladesh rationed fuel. Farmers far from the Persian Gulf confronted higher fertiliser prices because Qatar exports roughly one-fifth of the world’s traded liquefied natural gas through the same narrow waterway. Washington called the conflict a war against Iran’s state and military capacity. The ledger recorded a wider target.
The International Energy Agency measured the initial result. Around 20 million barrels a day of crude and petroleum products had moved through Hormuz before the war, roughly a quarter of seaborne oil trade, and that flow fell to a trickle as Gulf producers cut output by at least 10 million barrels a day. The World Bank recorded Brent’s rise by the end of March at 65 per cent, or $46 a barrel, the largest monthly increase on record. A temporary ceasefire brought prices down in April, a June framework offered another opening, and yet the agreement failed, the strait was effectively closed again in July, Gulf production remained 8.3 million barrels a day below its pre-war level, and the IEA entered August forecasting a 4.3 million-barrel-a-day fall in global supply for 2026.
The phrase collateral damage cannot contain an economic transfer this large. The American foreign policy apparatus chose the battlefield, American and Israeli aircraft delivered the first strikes, Iran used the geography it controlled, and households from Karachi to Quezon City paid the invoice through transport, food, electricity and debt.
The Tariff State Survived Its Illegal Tariffs
Seven months before the first strike on Iran, the Trump administration had already turned access to the American market into a schedule of political obedience. The White House invoked the International Emergency Economic Powers Act against China over fentanyl, India over Russian oil, Brazil over the prosecution of Jair Bolsonaro, and much of the world over trade deficits recast as national emergencies. The explanation changed with the country while the instrument remained constant.
On February 20, 2026, the United States Supreme Court broke the legal foundation beneath much of that regime. In Learning Resources, Inc. v. Trump, Chief Justice John Roberts wrote that the government’s reading of IEEPA would give a president the power to impose unbounded tariffs after declaring an emergency, without the caps, investigations and procedural limits Congress had written into actual tariff statutes. The Court rejected that reading. Duties already collected under the invalid orders became subject to refund claims, and the supposedly permanent architecture of emergency tariffs survived its constitutional encounter for less than a year.
The administration preserved the policy by changing statutes. A temporary 10 per cent tariff under Section 122 replaced part of the invalid system, and Section 232, Section 301, Section 201 and Section 338 actions expanded across products and countries. By September 2, the Tax Foundation’s tariff tracker counted more than fifty policy changes since January 2025, tariffs covering 54 per cent of American goods imports, an applied rate of 11.7 per cent and an estimated effective rate of 7.2 per cent for 2026. The Court removed one weapon and Washington opened the cabinet for another.
That legal mutation matters because the tariffs are often discussed as Donald Trump’s appetite for spectacle, with every announcement treated as a fresh outburst and every exemption as evidence that no coherent purpose exists. The administration is erratic about rates and dates, and American importers are now pursuing refunds for duties the government collected without lawful authority, and yet the bargaining method has remained consistent: impose pain first, require the weaker party to negotiate under it, and convert relief into purchases, market access or strategic alignment.
India supplies the cleanest documentary record. In August 2025, Washington added 25 per cent to duties on Indian goods because Indian refiners bought Russian oil. By February 2026, the penalty sat above the reciprocal tariff and lifted the effective burden on important Indian exports to 50 per cent. The United States-India joint statement then set the reciprocal rate at 18 per cent, committed India to reducing tariffs on American industrial and agricultural goods, and recorded India’s intention to buy $500 billion in American energy, aircraft, technology, precious metals and coking coal over five years. A separate White House orderterminated the Russian-oil penalty because India had committed to stop importing Russian petroleum and warned that the 25 per cent charge could return if those purchases resumed.
The documents record the exchange: access to American consumers was traded for changes in India’s energy procurement, tariff schedule and defence alignment. The Supreme Court later invalidated the IEEPA authority used to impose the penalty, but the concessions had already been announced. The ruling arrived after coercion had done its work.
Brazil received the same treatment in a more candid form. Trump’s July 30, 2025 order imposed an additional 40 per cent duty on selected Brazilian goods and described the prosecution of Bolsonaro, the conduct of Brazil’s Supreme Court and the regulation of American social-media companies as an unusual and extraordinary threat to the United States. The text made the political purpose explicit. Brazil’s judicial process had become a customs matter at an American port.
They Told Us There Was a Strategy
The insistence that Trump’s government is staffed by fools serves a comforting political function. It converts a programme into a personality, allowing each tariff reversal to stand as proof that nobody knows what they are doing and each act of self-harm to become evidence that there can be no design. You can despise the administration’s choices and still read its documents. They describe a government that has joined trade, industrial capacity, technology, defence production, sanctions and market access inside one national-security policy, assigned the work across departments, and accepted disruption abroad and higher costs at home as the price of changing the terms under which other countries trade with the United States.
The first order arrived on Trump’s first day back in office. The America First Trade Policy memorandum instructed the secretaries of State, Treasury, Defence, Commerce and Homeland Security, along with the Office of Management and Budget and the United States Trade Representative, to investigate deficits, Chinese commercial practices, industrial dependence, export controls, currency policy and the legal authorities available for tariffs. It directed Commerce to review the industrial and manufacturing base with the Pentagon and identify imports that could be restricted on national-security grounds. It told Treasury to design an External Revenue Service for customs income. This was an interagency order to reorganise economic relations around security power, issued before the tariff spectacles began.
The administration removed any remaining ambiguity in its April report to the president. The America First Trade Policy report called for a coordinated strategic approach using the authorities and expertise of the full federal government to secure the enduring economic, technological and military dominance of the United States. Its recommendations connected tariffs to market access, export controls, outbound investment restrictions, supply-chain relocation and industrial policy. It said new trade agreements should reshape the global system, increase American agricultural exports, return manufacturing to the United States and align partners with American economic and national-security priorities.
The word alignment is doing heavy work. A conventional tariff protects an industry or raises revenue. The Trump programme uses tariff relief to alter another state’s decisions outside the customs schedule. India did not receive relief only because it lowered duties on almonds, machinery or chemicals; the White House linked the removal of the Russian-oil penalty to Indian energy purchases and a ten-year defence framework. Brazil’s tariff order did not answer a Brazilian duty on American steel; it answered a criminal case against a political ally of the American president and Brazilian regulation of American platforms. The instrument crossed from trade into energy, law, technology and defence because the strategy had already erased the bureaucratic wall between them.
The 2026 Economic Report of the President records the method from inside the administration. Its trade chapter describes a comprehensive effort to rebuild the industrial base, rebalance commercial relations and use American market power to obtain better terms. It lists purchase commitments, investment promises, tariff reductions and supply-chain changes as achievements of bilateral agreements. USTR used the same language when it released its 2026 trade-policy agenda, saying tariffs had opened foreign markets while supporting production at home. A government can miscalculate and a court can strike down its chosen authority, and yet neither event makes the programme unintelligent; the documents show a consistent objective pursued through replaceable legal tools.
The legal substitutions after Learning Resources strengthen that conclusion. An administration acting only on presidential impulse might have lost momentum when the Supreme Court removed IEEPA. This one moved to Section 122 for temporary universal duties, continued Section 232 sectoral investigations, expanded Section 301 cases and preserved country-specific negotiations. The tariff rate changed because the governing statute changed. The bargaining pressure remained because the tariff itself was one component of the programme rather than its entire content.
The programme also identifies pain as a transmission mechanism. Tariffs raise the price of continued access to the American market. Export controls raise the price of technological independence. Secondary sanctions raise the price of buying from a prohibited supplier even when the buyer is not American. Financial designations raise the cost of insurance, shipping, banking and settlement for firms that never transact inside the United States. The government calls these costs pressure, enforcement or alignment. A worker in Manila, a refiner in Gujarat and a fertiliser importer in Bangladesh experience them as world pain.
No strategy requires perfect foresight. Washington did not need to know the exact March price of diesel in the Philippines to understand that closing Hormuz would hurt Asian importers first, and it did not need to predict India’s record July purchase of Russian crude to know that threatening secondary penalties would force New Delhi to choose among energy security, American market access and its relationship with Moscow. Strategy establishes the field of constraint. Other states still move inside it, sometimes in ways Washington did not intend.
That is why the self-damage does not disprove the strategy. Tariffs raised costs for American importers and consumers, invited retaliation, disrupted investment decisions and produced refund liabilities after the Supreme Court ruling. The Tax Foundation estimates a reduction in long-run American output and capital. The administration has accepted those costs because its published objective extends beyond this quarter’s consumer-price index: it seeks industrial relocation, greater defence-production capacity, reduced dependence on Chinese supply chains and foreign policy concessions from states that need the American market. Whether the programme will achieve those aims remains disputed. Its existence is written down.
The distinction matters for the Global South. A rival who is confused can be waited out. A state that has decided to spend some of its own wealth to preserve control over the system must be met with institutions, reserves and alternative markets. Calling every reversal stupidity leaves the targeted country intellectually unarmed, because it watches the tariff number while Washington works on the supply chain, the payment channel, the insurance contract and the replacement supplier.
Hormuz Multiplied the Tariff
Tariffs operate one border and one bargaining relationship at a time. A closed energy route reaches every importer at once. Hormuz therefore multiplied the pressure Washington was already applying through trade: it raised the dollar cost of fuel, weakened importers’ currencies, widened current-account deficits, lifted fertiliser and freight prices, and forced governments to spend scarce fiscal reserves cushioning households from a war in which they had no standing.
The World Bank’s April Commodity Markets Outlook projected energy prices to rise 24 per cent in 2026 and inflation in developing economies to average 5.1 per cent, one percentage point above its pre-war forecast. It cut expected growth for developing economies by 0.4 percentage point to 3.6 per cent. The report assumed the worst disruption would end in May and traffic through Hormuz would approach pre-war levels by late 2026. That assumption failed. The June truce collapsed, oil infrastructure and tankers came under renewed attack, and on September 6 Tehran announced plans for another exclusion zone after the United States struck three Iranian tankers and Iran fired missiles towards American warships.
The July IMF outlook placed global growth at 3 per cent for 2026 and said the war shock was falling most heavily on energy importers and states with little policy space. That aggregate conceals the allocation. American shale producers gain from higher prices. American LNG becomes more valuable. The United States entered the crisis as a net energy exporter with a strategic petroleum reserve, domestic production and the currency in which oil is priced. Pakistan entered it with recurring balance-of-payments crises, the Philippines with a 50-to-60-day oil buffer, and Bangladesh with neither the reserve depth nor the fiscal room to absorb months of disruption.
Washington also enjoys a second protection. When war lifts oil prices and inflation expectations, central banks delay rate cuts, international capital seeks dollar assets, and the currency used to pay for the shock strengthens against the currencies of countries buying the fuel. An importer therefore pays once for the barrel and again for the dollar. Its government can borrow to soften the first increase, but much of that borrowing is also denominated in dollars and arrives through institutions that demand cuts elsewhere. The fuel subsidy protects this month’s commute and the debt condition reaches next year’s hospital budget.
The burden is not confined to fuel. Natural gas supplies electricity and fertiliser production, diesel moves crops, and freight charges enter the price of imported food before it reaches a market stall. The World Food Programme warned in March that farmers dependent on Gulf fertiliser faced higher costs and possible yield losses. A bombing campaign presented as a contest over Iranian power had reached the planting calendar of people who would never see an Iranian missile, and the governments responsible could describe every additional food bill as a market effect because the market had carried the weapon for them.
The Dollar Converts Disorder into Protection
The system holds because the dollar remains more than a unit used to settle American trade. It is the principal reserve asset, the dominant funding currency, the denomination of commodity benchmarks, the base of the deepest sovereign-debt market, and the instrument through which the Federal Reserve can provide liquidity to selected central banks during a crisis. A rival must supply all of those functions at scale. Bilateral trade in local currencies can reduce one layer of dollar use, but it cannot yet replace the structure beneath it.
The IMF’s first-quarter 2026 COFER release put the dollar at 57.13 per cent of disclosed global foreign-exchange reserves, up from 56.42 per cent in the previous quarter. Roughly half the quarterly rise came from valuation effects as the dollar appreciated, which is precisely how the protection works: a shock partly produced by American policy can raise demand for the asset through which the rest of the world finances the shock. The renminbi held only a small share of global reserves, and China’s capital controls, managed exchange rate and shallow supply of freely accessible safe assets still limit its international use.
The scale beneath that percentage is harder to reproduce than the currency symbol. The Federal Reserve’s 2025 review of the dollar’s international role counted more than $28 trillion in marketable Treasury securities, with foreign investors holding about $9 trillion in the first quarter of 2025. By comparison, jointly backed European Union debt stood near $700 billion in May 2025. A reserve manager can buy or sell American government debt in volumes that would overwhelm most alternative markets, use the securities as collateral, and obtain dollar liquidity through arrangements already tested during the global financial crisis and the pandemic.
Access to that emergency machinery is political as well as financial. Six advanced-economy central banks maintain standing swap arrangements with the Federal Reserve, while approved foreign monetary authorities can use the FIMA repo facility to raise dollars against Treasury holdings. The IMF’s 2025 stocktake of the global financial safety net found that the dollar’s position in reserves, invoicing and financial transactions gives American economic and monetary decisions outsized influence, and it documented how Federal Reserve tightening had produced capital outflows, currency depreciation and higher borrowing costs in emerging and developing economies. When the Federal Reserve provides liquidity, the same hierarchy determines which institutions receive direct access and which governments must approach markets or the IMF.
This financial distinction turns endurance into power. The United States can finance a larger fiscal response in its own currency and its central bank can supply the settlement asset demanded during the crisis. An import-dependent developing economy must defend its exchange rate, preserve enough dollars for fuel and food, and avoid exhausting reserves before the next debt payment. Both governments may subsidise petrol, but one creates the money investors seek while the other spends the asset it cannot create.
China’s Cross-Border Interbank Payment System can route renminbi transactions outside the main Western messaging channels. India has the Unified Payments Interface, Russia built SPFS after sanctions exposed its dependence on SWIFT, and Brazil operates Pix. BRICS finance officials have discussed connecting payment systems and expanding settlement in local currencies for years, but the 2025 Rio Declaration still described the work as a cross-border payments initiative, a technical report and a search for greater interoperability. The institutions are moving without yet supplying a common reserve currency or a liquid financial market capable of receiving the world’s surplus savings.
The asymmetry gives Washington a dangerous privilege. It can impose tariffs that raise costs for its own consumers, fight a war that lifts energy prices for its own households, and add uncertainty that slows its own economy, and yet the damage arrives in a currency it issues, inside a financial market investors still enter when frightened, and within an energy system protected by domestic production. The same event reaches an oil-importing state through a weaker currency, a larger subsidy, a costlier debt service and an IMF negotiation, so both sides suffer while only one owns the measuring instrument.
Coercion Produces Its Own Escape Routes
The original draft of this argument treated India as proof that tariff pressure had buried BRICS. The record through August proves something more complicated. India cut Russian crude imports to about 1.1 million barrels a day in January as Washington’s penalty took effect and announced the American trade framework in February. Then the Hormuz closure removed much of India’s West Asian supply. Russian deliveries rose to 2.7 million barrels a day in June and a record 2.78 million in July, more than half of Indian imports, before falling to about 2.1 million in August because Russia had fewer barrels available and China was bidding for the same cargoes.
Washington had demanded that India stop buying Russian oil and Washington’s war then made Russian oil essential to India’s economy. Strategic autonomy returned as a necessity rather than a principle. The threatened 25 per cent penalty remains available under the February order, Congress has pursued tighter sanctions on Russian energy, and Indian refiners still need the American market and financial system, but the summer’s cargo data destroyed the claim that a bilateral declaration could command the physical oil market after the United States had disabled its largest alternative route.
Brazil’s response carried the same tension. Trump used American market access to punish a Brazilian judicial process, but Brazil and the European Union signed their long-delayed trade agreement in Asunción on January 17, 2026, and began provisional application on May 1. The agreement tied Brazil more closely to European rules and markets rather than creating a BRICS financial architecture, but it also reduced the relative value of American access. Coercion extracted attention while accelerating diversification.
No public document establishes that tariffs and the Iran war were designed as one centrally planned operation against BRICS. The demonstrated case is both narrower and stronger: the American foreign policy apparatus used market access, energy force and dollar power in ways that imposed the heaviest costs on import-dependent states, while each instrument reinforced the advantage of the others. Intent can be disputed. The distribution cannot.
The unresolved question sits beneath the BRICS summit opening in New Delhi on September 12. Can states build an alternative payment and reserve architecture quickly enough when every crisis drains the money, time and political trust needed to construct it? Washington is betting that they cannot, and yet every tariff order, every blocked tanker and every dollar invoice gives them another reason to try.
Part II follows that question into the institutions expected to answer it. It examines China’s attempt to widen renminbi settlement while retaining the capital controls that protect domestic political authority; India’s effort to preserve access to American markets, Russian energy and an autonomous rupee policy at the same time; Brazil’s turn towards European trade without surrendering its BRICS position; Russia’s construction of sanctions-proof channels that countries outside the sanctions system have little reason to adopt; and the Gulf states’ determination to keep Chinese trade, American security and dollar-denominated wealth inside one portfolio.
The second article also tests Washington’s strategy against a harder standard than summit declarations. It asks whether BRICS can convert CIPS, UPI, SPFS, Pix, local-currency lending and the New Development Bank into an interoperable system with enough liquidity and trust to survive a crisis. The comparison is between operating institutions: who clears the payment, who supplies emergency currency, where an exporter stores the surplus, who bears the loss, and which government can change the rules. That is where multipolar rhetoric either becomes financial power or remains a photograph from New Delhi.