- People closely following the fortunes of the geopolitical and geostrategic occurrences over the last year or so would have noticed how the whole global community was under severe duress, courtesy of the president of the United States of America’s penchant for imposing tariffs. Donald Trump, in his ill-advised and illogical stupor, decided that every other country trading with America was fleecing them by high tariff rates, thereby harming the interests of locals big time. He assumed that raising tariffs on imports from different countries would not only accrue enormous revenue flow into the country but also would lead the way for the USA to become great again. Whatever the logic or lack of it, the moves debilitated the economies of every other country for sure.
PC: TOI News
- India was cajoled, nudged, and threatened with 50% tariff by the Trump administration ostensibly for buying Russian oil, which was the reason for Moscow’s continuing conflict with Ukraine. The trade talks between the two countries were happening, but without an agreement on several tricky issues that would go against the interests of domestic players. The Indian leadership did not give in to the sustained pressure exerted by the American leadership but kept working to arrive at a mutually beneficial deal. However, the Indian leadership also assiduously pursued other avenues, including working for a free trade agreement with the European Union, among others. We know how India and the EU announced the FTA recently.
PC: LinkedIn
- This deal was dubbed the Mother of All Deals. Consequent to the announcement, many must be wondering whether the Mother of All Deals already delivered a baby. Trump’s sudden announcement of a trade deal with India, effective immediately, has led to speculation that last fortnight’s India-EU FTA may have urged him to make haste. Recall that his finance minister’s reaction to FTA – Europeans signed a trade deal with India, funding the war against themselves, was totally sour grapes. But with the deal done, all bitterness of the past six months, including Trump’s dead economy remarks about India, should be forgotten. Make no mistake, the deal might not be as abrupt as it seems.
PC: India Briefing
- The Budget had conveyed the GOI’s confidence in the economy, based on some big and impending developments. The importance of this deal is evident from the market reaction. The EU FTA lifted the Sensex by 300 points, and the rupee by about 0.2%. After the US deal, Sensex is up 2000-plus points, and the rupee more than 1%. Understandably, given that Trump’s tariffs had jeopardized billions of dollars’ worth of Indian exports. Our shipments decreased by about a fifth between May and Nov last year. Tariffs were hurting India in other ways, too. Prolonged uncertainty discouraged investors. India’s place in China+1 supply chains looked doubtful. But now, with the tariff down from 50% to 18%, India’s export competitiveness is restored. This augurs well for India. Period.
