TRUMP TRADE MAYHEM: INDIA'S OPTIONS

In a fast-changing world, India's focus needs to be on pushing forward a broader, comprehensive trade and investment reform agenda

- AMITA BATRA

The first fortnight of April saw the world reeling from the aftereffects of reciprocal tariffs announced by US President Donald Trump. The potentially catastrophic impact on financial markets has led to the 90-day pause on the implementation of the reciprocal tariffs, other than on China. All other countries, for now, are subject to 10 per cent base tariffs on all products, with the exception of aluminum, steel, and auto sector (vehicles), which are subject to 25 per cent tariffs. Electronic items like smartphones and laptops, including from China, have been added, on April 12, to a set of exempted products that earlier included pharmaceuticals, semiconductors, copper, and lumber.

A uniform 10 per cent import tariff across nations comes with an ease of implementation and administration by the Customs authorities, while also having positive revenue implications. Hence, this may have a greater chance of becoming the base tariff beyond 90 days. However, it is necessary to introduce a note of caution here. Not only is President Trump besotted with tariffs as an effective instrument for running his economic and foreign policy but there are also other elements that may contribute to uncertainty for a longer period of time. These include the possibility of differential outcomes of individual country negotiations with the US in terms of both tariff levels and timing.