TIME TO IMAGINE A NEW TRADE ORDER

International trade and the idea of nation-states choosing their independent economic policies face a challenge as the new US president, Donald Trump, has warned the BRICS nations, including India, against developing their own common currency.

- TULSI JAYAKUMAR

INTERNATIONAL trade and the idea of nation-states choosing their independent economic policies face a challenge as the new US president, Donald Trump, has warned the BRICS nations, including India, against developing their own common currency. Trump threatened the bloc after its October 2024 summit in Kazan, where the ambition was announced to foster relations with the Global South and shape an alternative multipolar order, particularly in the financial and trade systems. Another idea being simultaneously proposed is that of a weaker dollar, which could make US exports more competitive and strengthen the trade balance in its favour.

Trump's threats to impose tariffs exceeding 100 percent reflect a continuation of his protectionist approach, which characterized much of his first stint as president. Similarly, the idea of weakening the dollar through a loose monetary policy somehow aligns with the intent to deliver on the promise of Making America Great Again. Let us examine the ripple effects of these moves in the trade arena.

The trade policies of Trump in 2018 and 2019, followed by tariffs imposed on Chinese goods by the Biden administration, are estimated to have resulted in a reduction of the US's long-run gross domestic product by 0.2 percent, capital stock by 0.1 percent and employment by 142,000 full-time equivalent jobs.