The enhanced tariffs on imports of America announced by Donald Trump recently as second-term President of USA, resulted in turmoil in the economic world. Though they were aimed at Making America Great Again (MAGA) and bringing back manufacturing units to US they boomeranged and led to widespread discontent in US and world over. Trump threatened 25%tariffs on all Colombia products on January 26th and Mr.Petro president of Colombia also announced 25% increase in Colombian tariffs on US goods. Next Trump on Feb.1st issued order to impose tariffs on imports from Mexico, China and Canada. All the three countries intend retaliatory measures. March 5th Trump paused his tariffs for a month after consulting big 3 auto makers Ford, General Motors and Stellantis. The saga thus continues for long with imposing tariff on one day and pausing it the other day. By March 26th Trump placed 25% tariffs on auto imports, a move claimed would foster domestic manufacturing. But automakers felt that it would put a financial squeeze on them. On April 2nd Trump announced a 10% baseline tax on imports from all countries and higher rates for some countries. The US officials are struggling hard to explain the logic that led to the biggest tariff shock in history. Diplomats and politicians of the countries where the tariffs have been imposed are caught in a dilemma. As trade exchanges and share markets fell sharply crores of assets evaporated in a jiffy, there is growing anxiety in the world.
The situation warranted few corrective steps or revoking certain decisions. However, there are sharp differences among Donald Trump’s economic advisers on these measures. While a camp, led by Treasury Secretary Scott Besant, wants a “break” on tariffs and discussions with several countries, others such as Peter Navarro are advocating these measures to be implemented. “This is an economic revolution, and we will win,” “Hang tough, it won’t be easy, but the end result will be historic.” The US president declares as late as 12th April too.
President Trump declared a trade war on all countries because he felt that the world was not following in US footsteps. Former US Economic Secretary Lawrence Samars commented that Trump was following the most destructive economic policy since World War II. Trump is said to have launched the biggest trade war since the 1930s.
The British Prime Minister Keir Starmer says “The world as we knew it has gone. Old assumptions can no longer be taken for granted after the imposition of sweeping US tariffs on countries across the world. It has created a ‘new world’ governed by ‘deals and alliances’ rather than rules and there will be no winner in this trade war,” The world leaders are consulting each other, some in favour of imposing their own tariffs on American imports to their countries in retaliation and some leaders longing to have deliberations with US and work out mutually acceptable trade agreements. Mr. Starmer had a call with Japan’s prime minister, Shigeru Ishida about maintaining a “cool, calm and pragmatic approach” in response to the tariffs.
It is largely felt that Globalization, which began with the collapse of Soviet Russia in the 1990s, has now ended with tariffs imposed by Trump. This has opened a new era in international trade with protectionism of domestic industry. It is to be seen how far the national interests will be served with such steps. It is interesting to note that Trump claims to generate $600 billion in revenue annually from a retaliatory tax on countries opposing the US, and he has passed a resolution to provide tax concessions to an extent of $5 trillion over the next ten years to corporates and the rich. Whose interest will be served is clear with such steps.
Elon Musk’s wealth, which was expected to grow massively after Trump came to power, has so far lost $135 billion in this turmoil of tariffs. The Washington Post wrote that Musk had strongly urged Trump to reconsider imposition of blanket raise of import tariffs. There were numerous demonstrations in front of parliament and central government offices in the US. Lakhs of people reportedly participated in them. There were also protests in cities of other countries such as London and Paris. Mr. Trump’s tariff strategy is not sailing as he wished with opposition from investors and protests of people. On 9th April, Trump was forced to announce a pause [suspend] for 90-days in the implementation of the “reciprocal tariffs”. This brought some relief to the market and there was a positive swing. It is estimated that his own assets have increased by Rs 3570 crore with this decision.
It is well known that Americans depend 90% on imports in several fields. The price of electronic goods such as smartphones, laptops, semiconductors and chips have been skyrocketing with increased tariffs. Not only ordinary citizens, but also tech giants such as Apple and Samsung have expressed concern over this. In April first week Trump announced an exemption from duties on these electronic imports from any place including China. This created a marginal relief to natives. But the next day it was told that they will be brought in to a new bracket of taxesfrom 15th April. Thus, the swing and dance of tax imposition is changing daily with indeterminate decisions.
It’s not easy to compensate for the damage done. Markets are recovering a bit from the recession, but Trump has pushed aside commitments that support the global economy and introduced extraordinary instability and chaos. “We are in an age of chaos. It’s a disaster in the real world. Trump’s confused beliefs and contradictions are an obstacle to many bilateral discussions, “many U.S. economic analysts have openly declared. Former President Barack Obama has declared that he does not think trump’s tariffs will benefit the United States. But Trump is self- satisfied with the view “Now all countries are contacting us. America is back in the driver’s seat,” “China has suffered a major blow compared to the US. Many countries, including China, hitherto have treated us unfairly. That will not be the case anymore. America will not be in a state of helplessness” he supports himself. What more can be expected from a businessman who turned American citizenship into a $5 million sales commodity.
The United States is engaged in a brutal trade war with China. Tariffs of the two countries are now at the peak of 145% and 125%, respectively. Trump is not in the way of retreating as far as China is concerned. Chinese President Xi Jinping is also determined to face it. Since Trump became president, tariffs have been a major part of his policy and his implementation of tariffs on China has sparked an escalating trade war. Trump previously raised the tariff on Chinese goods to 104 % and after China responded with a hike of its own on U.S. goods to 84%, Trump increased the tariff rate on Chinese imports to 125% in addition to previous 20%. On 11th April, Xi Jinping announced that China is “not afraid” and warned President Donald Trump “going against the world will only lead to self-isolation,” according CCTV. Shortly after his statement, Beijing announced reciprocal tariffs of 125% on all U.S. imports.
China is now rapidly growing on the path of its socialist structure in the face of many obstacles and intrigues.”For over 70 years, China’s development has relied on self-reliance and hard work—never on handouts from others, and it is not afraid of any unjust suppression.” Said Xi Jinping. In 2024, the US GDP was Rs 29.2 lakh crore and China’s was Rs 18.9 lakh crore. The growth rate is 2.8% and 5%, respectively. That means China is soon going to overtake the US to become the number one country. Donald Trump is trying to prevent China’s growth as he considers China as a competitor and a threat to US superpower status. In addition to the 10% tariff served to all countries, he imposed 145% on Chinese goods.There are advisors to Trump, who insist to raise tariffs further and bring China to his feet. China is going its way as if it is “not afraid of these thunders, threats, and blackmail tactics”. The US, which has paused the implementation of tariffs for 90 days to all other countries, has not given that exemption to China. China considers it as a serious violation of international trade laws and a heinous economic threat. China’s Finance Ministry said in a statement: “The U.S. escalation of tariffs on China is a mistake on top of a mistake, which seriously infringes on China’s legitimate rights and interests and seriously undermines the rules-based multilateral trading system.”
Trump during his first term only launched the trade war against China in 2018, China had been fighting it out successfully using all its armamentarium like improving the domestic market, reducing exports and imports from the US, regulating American manufacturing companies in China, restricting or including some US companies on ban. It took all steps to reduce its dependency on American market. China has played down the risk of damage to its exports from Donald Trump’s new tariffs, with an official saying the “sky won’t fall,” as stock markets rose amid signs of a retreat on electronics restrictions.
On the other hand, 90% of what American citizens consume is based on imports. The manufacturing sector has long since moved to China and other countries. Now with the increase in tariffs,the prices of goods in the US market will rise sharply. Experts say the monthly additional burden of 30-40% befalls on essential sustenance alone.This is causing turmoil in the US. Big businesses have warned that the fight could hurt global and U.S.economies. The US-ChinaTrade Council has called for an immediate dialogue.
Trump is imposing a varied tariff structure treating each country on its individual merits. On April 2, he imposed tariffs of 17% on Israel,46% on Vietnam and 26% on India. His main intention is to isolate Beijing. Trump is seeking to reduce tariffs on a number of countries. Maybe he will settle for a universal 10% hike on all imports from the world except China. Negotiations are being held to sign trade agreements with each country on separate terms and conditions.
What is India doing now?
Few weeks ago, the US Commerce Secretary visited India. India is relying on its capacity to substitute imports from other countries with US goods as a dealmaker. This move could enable the US to reduce its trade deficits with India, which is one of the alleged aims of these tariffs, while also boosting exports to the US. Both countries are expected to commence virtual discussions this week, aiming to reach a broad consensus on tariff concessions by the end of May.
Over the past few weeks, India has radically changed its tariff policy, cutting import duties on about 8,500 US industrial goods, including bourbon whiskey and Harley-davidson-made high-end motorcycles. Digital service tax has been abolished to benefit X and other companies. India has expressed its willingness to buy American oil, LNG and defence equipment to reduce the bilateral trade surplus. As part of the negotiations, India is considering the US demand for a reduction in tariffs on American agricultural products in India, Bloomberg News reported last week. If this happens, the Indian agriculture sectorand the the dairy industry suffers a lot. India has been trying to enter into a deal with the US with so many concessions but is not ready to impose a response tariff on imports from the US even when American allies like Canada, European union and some others declared reciprocal tax.
Economist Madhavi Arora estimates that India’s exports to the US could fall by $30-33 billion, equivalent to 0.8-0.9 per cent of gross domestic product. The US action will hurt India’s already weak economy. The Reserve Bank of India has already cut interest rates to boost growth.“Our exports are likely to fall signifi cantly with US tariffs and it will have a negative impact on GDP growth. There is a cloud of uncertainty over the above,” said RBI Governor Malhotra. Ajay Sahay, director general of the Federation of India Export Organisations, hopes in contrary that “mutual tariffs on India are lower than major competitors like China, Vietnam and Bangladesh, so this will help Indian exports, especially in sectors such as clothing and footwear.” Telangana Industries Minister announced at the Global India Business Forum conference that investors from the Caribbean countries will come to India. Our Commerce Minister Piyush Goyal has warned our exporters not to import goods from countries where the US has imposed high taxes [e.g. China] and re-export them with our stamp on them. This has been a practise since long and India now wants to curb it to win America’s admiration.
Apple’s main India suppliers Foxconn and Tata shipped nearly $2 billion worth of i-Phones to the United States in March, an all-time high, as the U.S. company airlifted devices before President Donald Trump declared the tariffs. The smart phone maker stepped up production in India and chartered atleast six cargo flights to ferry 600 tons of iPhones to the United States to ensure sufficient inventory in one of its biggest markets where Trump’s tariffs would push up costs. To expedite shipments, Apple lobbied Indian airport authorities to cut the time needed to clear customs at Chennai airport, to six hours down from 30 hours. This is how manufactures in India found an opportunistic way to “beat the tariffs”.
External Affairs Minister S.Jai shankar has been making phone calls to US Secretary marco Rubio to request that the two countries reach a trade deal at the earliest.India considers it essential to enter into bilateral trade agreements with the US and the European Union.The US is India’s largest trading partner from 2021-22 to 2023-24. The US accounts for 18% of India’s goods exports and 6.22% of imports.External affairs Minister S. Jaishankar said that the deal was not reached even after four years of trials and negotiations with the US during Trump’s first term. Mr. S Jaishankar said “the first round of the trade deal would be concluded by the end of this year as envisaged at a recent meeting between Modi and Trump. It has been broadly decided to increase the bilateral trade from $127 billion in 2023 to $500 billion by 2030.
India is now looking forward to the United States without any hesitation in the face of a 26% import duty. “Modi is very smart. He can negotiate better than me” Trump said once and Indian press finds solace in that, but remember Trump also said that his friend ship with Modi will not affect the imposition of tax on Indian products.
Will India learn its lessons?
Trump still hopes to strike great deals through negotiations with dozens of countries that queue up to talk to him, even though the US has dramatically raised tariffs on almost all countries. He boasted that representatives of 75 countries called him on phone and they agreed to a 10% increase and were ready for agreements. He announced that the implementation of tariffs would be suspended for 90 days only for the countries that did not impose retaliatory tariffs on the United States.This concession would not apply to the 145% tariffs imposed on China.
The European Union called for resistance. It too will impose tariffs on American products in a phased manner. Chinese President Xi Jinping said there would be no winners in the tariff war and that the entire international community has to face it. He called on all countries of the world, especially the European Union, to come together with them to counter America’s unilateralism and economic violence. China is now seen as a reliable global partner in contrast to the unpredictable United States of President Trump, whose on-again, off-again tariffs have upended financial markets and confounded governments.
U.S. Finance Secretary Scott Besant declared “the deal is a ‘bargaining strategy’. The problem, was with countries like China, which were causing economic imbalances in world trade.” Since Mr. Trump imposed tariffs on Chinese goods in his first term, some South East Asian countries have become alternative routes for those goods to reach the United States. That made Vietnam and Cambodia a target for Mr. Trump’s new steep tariffs. Mr. Besant declared that soon trade agreements would be signed with China’s neighbours, Japan, South Korea, Vietnam, and India, and that those countries were ready for it. With this he revealed the real motive behind the tariff turmoil. It turned out that America’s aim was to isolate China and maintain its geoeconomic supremacy. US is using its economic strength as a weapon against the countries either to intimidate or lure them to fall in line with USA, but these actions turned out to alienate the US. It is noteworthy that the number of countries getting closer to China is increasing.
Trump has long believed that tariffs are a powerful weapon to ensure jobs in the manufacturing sector return to the United States. That’s why his actions are not insane ,not a stone in the hands of a psychopath as some think. He is deliberately targeting and throwing his weapons as per a plan. It should be noted that he is implementing the same policies that he repeatedly announced in his election campaign. But the real issue is whether he will get the desired result with this policy.
Can you think that Trump or his team, who dropped tariffs so heavily on the world, did not anticipate the consequences? especially the fall in the markets. Why did his policies are reversed and frozen within a week? Why the collapse of the stock markets? Does that mean that the damage has been done beyond their expectations? What does this retreat mean for Trump who boasted of an economic revolution which despite some losses, would restore America’s stature and its strength will rise exponentially? The suspension of tariffs shows the impact of the greed for immediate profits and inter contradictions of corporates and weakness and vulnerability of market forces in a decadent capitalist system, however strong they may appear. The world has to take a lesson.
China has proposed that the two largest developing countries [India and China] should come together to combat US tariff harassment. It also called upon all countries of the world to come together and oppose the actions taken by the US unilaterally with self- protectionist attitude. The poor and developing countries are suffering due to this trade war. The Chinese president interacted with the President of India in the first week of April and called for cooperation that serves mutual interests. He wanted india-China relations to be further strengthened and it should be a combined dance exercise of dragon and elephant. The Chinese foreign minister said beijing and New Delhi should play a leading role in opposing hegemonic politics.
There is no choice but to unite all US affected countries. At a time when European countries were wondering how to trust Trump, who had sidelined the European countries working with him in the Crisis of Ukraine, and who also declared a tax war on them; China has sought to mobilise all such countries. Chinese Premier Li Qiang spoke to European Union President Ursula van der Lian. It’s going on. In this fight, not all countries may come together and some may play a pro-American role.
In this situation, India must take the right decision. Even in the present crisis, India is seeking a path unconcerned with rest of the world. It is treating the situation as its individual problem and pursuing a way to negotiate with US and solve it in its favour. This is described by some as a balanced view and by some as strategic silence, but in reality it is opportunism. It indirectly supports and subserves US hegemonism. It is to take false solace by thinking that the bullet just grazed and not hit, when someone is firing at you purposefully. To remain neutral and not to resist a mass illegality is equal to stand on the side of the criminal. To make a deal with the United States without voicing protest or resistance and not showing solidarity with the affected countries of the Global South; how can India be the voice of Global South, a lofty ideal proclaimed by our prime minister repeatedly. Not to be a part of the voice of the poor and middle class developing countries at this juncture is turning the face away from our international responsibility.
We should take note of the words of Jeffrey Sachs, an American, Columbia University professor, a great economic and political analyst and a leading adviser to the United Nations. He, in his recent interviews and talks gave a “friendly warning to Indians”. He told, “the US wants to use India to beat up China. However, India should not take part in the game played by America. India is too big a country to play for America. Washington’s long-standing strategy has been to make other countries quarrel with each other. India should not get caught up in that geo-strategy.” “The Americans, are crazy especially towards China. They are not accepting the concept of peaceful coexistence as it has been widely used by China. Neither they support a sustainable development even when it is the consensus of the world accepted by 193 UN member states. You’re being dragged into this. You don’t allow to be pulled into this. I am aware that india and China have their own issues but settle them. Together you are 40% of the world’s population. Together you could help to run a very decent world.
Moreover, you are a member of strategic groups like the Quad that benefit the United States. Some of your politicians are saying that the difficulties you are facing are not due to Trump’s trade policy. It’s because of China, it’s not true, it’s because of Trump. You should be careful not to fall into His delusion. Mr Sachs reminded us of Henry Kissinger’s famous remark “To be an enemy of the United States is dangerous, but to be a friend is fatal.” If you are in America’s allies, you have to be more careful. It is very dangerous, because the entire U.S. foreign policy in any part of the world is ‘divide and conquer’. That’s how empires behave, that’s what the U.S. learned”. America’s priority is how to maintain her declining reputation and hegemony, for which it sacrifices her friends and companions. “It wants India to bash China.” he narrated.
For many centuries before the British colonial rule, India was the greatest economy in the world. Now again it is climbing the ladder of development. India will become the second largest economy in the world overtaking united states in 10 or15 years” However, like China, which faces vengeance and hostility from the US because it ruptured the illusion of united states which expected to be number one forever, India too will have to “face the same recent tomorrow as you overtake united states” “The United States is in a kind of neurotic reaction” and it will not tolerate anyone going beyond it, he warned.
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Will the words of foreign scholars like Geoffrey Sachs befall on the ears of our rulers? Will India still learn the right lessons? Will it get out of the US strategy and defend its independence and ethnic interests? In the present era we don’t need any one capital telling the rest of the world what to do. We have to follow the consensus of the world, which agreed to the idea of sustainable development for all countries, for all peoples, for all parts of the world. “Civilizations behave as civilizations do, and so being the most populous country in the world, you [India] take care in your relations everywhere.”
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Dr. S.jatin kumar is an orthopedic surgeon by profession and a social activist working for peoples’ democratic movements. He is presently vice president of organisation for protection of democratic rights -OPDR- Telangana state and central secretariat member of India China friendship Association-ICFA. He has contributed to countercurrents several times
