- The global community must be aghast with the way things are panning out ever since the maverick and an extremely unpredictable Donald Trump took over the presidency of the United States of America. Trump’s obsession with the tariffs is well documented, aimed at impressing his millions of loyal supporters baying for the electoral war cry Make America Great Again. No sooner assuming the office, Trump has meant business, signing a slew of executive orders on the promises made during the campaign. The moot point to ponder over here is whether pressing ahead with the tariff makes any economic sense when free trade agreements are the order of the day. The global community is bracing up for the short-term upheaval though.
PC: CNN
- Not even India was spared by the Trump tariff blitzkrieg when the President announced that reciprocal tariffs will be imposed on countries, including India, even as Prime Minister Narendra Modi had landed in the US for a hurriedly convened summit. Mind you, most complex products are produced across countries. That’s why tariffs don’t benefit tariffers and hence they would be of little use in the long term. As is visible, Trump shoots first, asks questions later. Mexico, Canada, and China know by now. Tariff bullets are whizzing India’s way as well. But being trigger-happy has a downside – you sometimes shoot your amigos. So, just a day after enforcing 25% import duty on Mexican and Canadian goods, Trump announced concessions for cars. Why?
PC: News18
- Because Ford and Stellantis – the latter owns Chrysler, Dodge, and Jeep brands – appealed. Thanks to a Trump 1.0-era FTA, their car production is spread across all three countries. Components and finished cars move across freely, benefiting all. By pressing the tariff button, Trump 2.0 jeopardised production. Now, he’s given them a month’s breather, but China’s riled, and has retaliated with 10-15% tariffs on US farm products. That will hurt MAGA farmers – a ricochet wound. US soy, corn, beef, chicken will be costlier in China. Cotton too. But China fulfils a quarter of America’s apparel needs – costlier cotton means costlier tees. Plus, China declared it’s ready for a tariff war, a trade war or any other type of war. Things are heating up everywhere.
PC: India Today
- What if it makes its rare earths rarer for US firms? Mind you, there are no winners in a tariff war. Now, industrial production is much more integrated globally. Every complex product – phones and cars, of course, but also shirts – is part of a global value chain. OECD estimates that 70% of international trade involves global value chains. Raw materials, components, and finished goods crisscross borders repeatedly. None of the countries can claim to make every component at home since many are imported from different nations. Higher tariffs mean a product produced locally will get hit because of the imported components becoming costlier. Thus, it can be safely concluded that tariffs will serve none and are a counterproductive move in the long run. Period.
