- The global community knew what to expect no sooner than the maverick and extremely unpredictable Donald Trump won the elections to the most powerful executive office in the world. Soon after his coronation as the president of the United States of America, Donald Trump set about initiating some of the most discussed measures, such as imposing tariffs on countries charging more for American products. Of course, before the Indian Prime Minister visited the Oval Office, Trump coined reciprocal tariff as the way forward, delineating in no uncertain terms that the USA would charge equal against countries whom he pointed out as unreasonable. A slew of executive orders ensued with a grandiose declaration of imposing tariffs as well.
PC: The Annapurna Express
- The moot point to ponder over here is what it will entail on the domestic pattern in the USA even though the loyalists of Trump must be gleeful with the promised measures being implemented at a breakneck speed. Even India is not spared of the tariff war since the President has already declared he will not go soft on New Delhi. As such, to survive tariff wars, India needs to be clever, and its key producers must up their quality game fast. Trump’s reciprocal tariffs will hit Indian exports on April 2. Per a Citi Research analysis, the annual loss for India could be as high as $7bn. Currently, US-India trade amounts to $150bn, skewing heavily in India’s favour. India’s $45.7bn surplus put it in Trump’s spotlight.
PC: Oil Price
- Trump brought it up hours before meeting PM in Feb, and again recently when he told Congress, India charges us tremendously high tariffs than we charge them. US has a $1.7tn trade deficit; India charged an average of 11% on US goods, whereas the US charged only around 3%. Beyond averages, Trump has long complained about India’s 100% tariff on cars. Industrial ethyl alcohol faces 150% duty, food items 68%, footwear 15-20%. As can be seen, it’s not easy for America to sell to India. Trump’s intent has been clear since his campaign, and India tried to preempt tariffs by reducing some duties in last month’s budget. It also offered to buy more US oil, gas and military hardware, eventually raising mutual trade to $500bn by 2030.
PC: Moneycontrol
- However, Trump 2.0 is not playing the waiting game – he’ll sign out of the White House in 2029. So, what can India do before tariffs take effect in four weeks? We must not waste time signing an FTA because Trump doesn’t value them. He scrapped the one he signed with Canada and Mexico in 2019. It makes sense to not retaliate. Instead, scrapping tariffs on 90% of American industrial goods that are already free to import under other FTAs, and seek reciprocal concessions would be beneficial. Meanwhile, striking deals with other countries affected by Trump’s tariffs should be considered. Our industries will have to become more resilient and find new markets because the world won’t wait for them to come of age. It’s time our industries grew too.
