Trump Card
– N K Tripathi
President of US, Trump has jolted the rule based global trade. Mutual trust is its first casualty. Trump’s manoeuvres have been widely deciphered across the continents. His stated stand for his exorbitant tariffs everywhere is to provide protection to American manufacturing and decrease ever expanding trade deficit of US. He also hopes that enhanced income from tariffs will enable him to cut taxes on rich. So far American consumers have not felt inflation. The higher cost of import has been partly absorbed by the exporting countries and the American importers. Some sectors are doing well and keeping prices in check by use of AI.
It’s tempting for Trump to see other countries eliminating their tariffs on American goods in exchange for merely less-punitive tariffs from America as a triumph. It is not. The rash of new levies coming into force will hurt America most. Trump has already discarded incentives for green energy and he is least bothered about climate change, allowing reckless use of petroleum. But with the scheme of tariffs coming into full force, it will show inflationary trends in the US market.
India seems to be the worst hit. Over and above earlier high tariff of 25% an additional punitive tariff of 25% will make a total tariff of 50% on India. It is economic, geopolitical, and emotional ( we thought Trump is our friend) setback for India. Punitive tariff is imposed on the pretext of Russian oil India buys. EU is exempted because of racial consideration and China is exempted because of critical US dependence on Chinese import, especially rare earths. Trump thinks India is a soft target. But India is no pushover. Even though the benefit of Russian oil are not very significant now, India wants to assert its independence and sovereignty. India has not budged an inch on the issue of agriculture and dairy as the farmers are politically very sensitive for India, as 45% of its population is dependent on it. We just can’t reduce our import duties in these sectors.
Trump has targeted India probably on issue of credit for ceasefire after operation Sindoor. He also hopes India to pressurise Russia for ceasefire in Ukraine. India being a softer target than China, he is punishing India for Russian oil. He is also annoyed with BRICS for threatening Dollar. India can respond with retaliatory 50% tariff to send a signal to US and for future negotiations. India’s leverage is its far greater market size, strategic geography, technology, and defence partnerships and its role in energy flow.
There are now some tectonic fissures in geopolitical situation among militarily four biggest countries- US, Russia, China and India. Some nuanced posturing of tilt is necessary with China. However, India is eagerly waiting for the outcome of Alaska meeting on 15th August between Putin and Trump for ending Ukraine- Russia war. A positive result from cold Alaska may warm up India US ties but India should be ready to counter any Trump card.
