Quantifying the Spillover Effect of U.S. Trade Policy Uncertainty on Economic Growth of BRICS: A Panel Data Investigation

[Purpose] Amid escalating geopolitical risks and rising global uncertainty, fluctuations in trade policy have emerged as powerful forces shaping macroeconomic outcomes. Against this backdrop, the present study evaluates the impact of U.S. trade policy uncertainty (TPU) on the economic growth (ECG) of BRICS economies over the period 1985–2023. [Design/methodology/approach] To ensure methodological robustness and reliable inference, the study employs advanced panel econometric techniques, including the Cross-Sectional Autoregressive Distributed Lag (CS-ARDL) model, Fully Modified Ordinary Least Squares (FMOLS), and the two-step System Generalized Method of Moments (GMM). These approaches address issues of cross-sectional dependence, endogeneity, and heterogeneity across BRICS economies. [Findings] Empirical results reveal a statistically significant negative relationship between U.S. TPU and both GDP per capita growth and GNI per capita growth in BRICS economies. Heightened trade policy uncertainty amplifies investor risk perceptions, delays investment decisions, and contracts capital inflows. Furthermore, TPU disrupts trade planning, increases transaction costs, and weakens export performance, particularly for economies reliant on external demand. These outcomes underscore the need for adaptive and resilient domestic economic policies to mitigate the spillover effects of global uncertainty. [Research limitations/implications] The analysis is constrained by the availability of long-term comparable data for all BRICS members and focuses solely on the effects of U.S. trade policy uncertainty. Future research could incorporate regional trade uncertainties or domestic policy volatility to broaden the understanding of cross-country resilience mechanisms. [Practical implications] The findings provide actionable insights for policymakers in emerging markets. Strengthening domestic institutions, diversifying trade partnerships, and building flexible policy frameworks can help minimize the adverse effects of global trade policy shocks. Additionally, coordination among BRICS members can enhance collective stability amid evolving global trade tensions. [Originality/value] This study is original in empirically validating Real Options Theory within a cross-country trade uncertainty framework, highlighting how global policy ambiguity drives cautious investment behavior and delayed economic activity. Unlike prior studies that focus on single-country or regional contexts, this research uniquely examines the long-term macroeconomic consequences of U.S. trade policy uncertainty on the BRICS bloc, using comprehensive and robust econometric techniques.