MAGA pressure on the rupee

With the rupee falling less than other currencies and more Chinese dumping likely, Indian business may face domestic sales dip and less competitive exports

- JAMAL MECKLAI

IN 2014, ONE of Mark Zuckerberg's mantras when he was building out Facebook was "move fast and break things." But, when a big old guy starts to move fast and break things, chances are you will get an unholy mess.

Donald Trump has started super-fast, appointing his senior advisors and making announcements, the first of which was that on Day 1, he will implement tariffs of 25% on all imports from Mexico and Canada (unless they act to prevent immigrants coming to their borders), and an additional 10% on all imports from China (over and above the significant tariffs already in place).

China, recognising that its huge trade surplus with the US is like a red rag to the Make America Great Again (MAGA) bull, has already responded by reducing the value added tax rebate it was providing to exporters on aluminium and copper products. This has immediately led to a sharp rise in prices of these metals on the London Metal Exchange. In a natural dance, the local producers of these products in India at least (and I would suspect elsewhere) have immediately pushed up domestic prices. The unsurprising conclusion is that even discussion, let alone imposition, of tariffs directly increases prices.