Trump's Tariffs Are India's Opportunity

It must use tariff threats to lower its own rates — not as a defensive response, but as an assertive strategy for Viksit@2047

- LAVEESH BHANDARI

Donald Trump's United States has finally instituted what it had long threatened. A combination of overarching tariffs at 10 percent across all products, plus reciprocal tariffs proportional to those imposed by trading partners, will make many of our exports far more expensive than before. India features high on the US' list of what it considers to be unfair trade partners, due to both high tariffs and non-tariff barriers. India has wisely remained largely silent on the US threats, and this author's expectation and hope is that it will be temperate in its response to the US actions as well. In my view, India has played it wisely so far, and would do well to continue with the non-reactionary approach it has charted.

It is quite clear that this announcement is only the beginning, and the US will impose tariffs across the board, without discriminating between its friends and not-so-good friends. As this process plays out, there will be an immediate negative impact on the US economy. Prices are widely expected to rise, while productivity and profitability will probably fall. Given the massive support Mr. Trump enjoys within the US, he will be able to ride out the initial weeks and months, irrespective of the adverse impact on both US consumers and producers. Therefore, a reversal of the policy is unlikely soon.