Reciprocal tax plan sets off alarm bells amid global trade war buzz

The move by the United States President Donald Trump to impose 'reciprocal' tariffs on a 'country-by-country' basis is set to trigger a global trade war, according to officials watching this space.

- SHREYA NANDI

While the plan on reciprocal tariffs, unveiled by Trump on Thursday ahead of his meeting with Prime Minister Narendra Modi in White House, was meant to narrow America's long-standing trade deficit in goods and bolster economic and national security, experts pointed out that such a policy would violate the global trade norms of the World Trade Organisation (WTO).

While the finer details of the implementation of the reciprocal tariff plan are expected only in April, Indian policymakers are busy trying to decipher the impact. They are also preparing for the trade agreement negotiations with the US.

The reactions have been sharp from around the world. The European Commission on Friday said the 'reciprocal' policy was a step in the wrong direction and that it would react firmly and immediately against unjustified barriers to free and fair trade.

Similarly, South Korea has said it would review non-tariff barriers, in response to the American plan.

Even as Trump and Modi announced their intention to seal a bilateral trade agreement within the next few months, the US president made it clear that Washington would not spare India from reciprocal tariffs.

"Whatever India charges, we charge them," Trump told reporters.