Trump tariffs and India’s options

American shoppers may soon feel the pinch of Donald Trump’s tariffs. High tariffs on consumer goods imported into the United States (US) will lead to inflation.

- KIRIT S PARIKH

Over time, this will affect most US citizens, and economic growth may stagnate if demand declines. Also, as the prices of intermediate goods increase, the cost of domestic manufacturing — and ultimately the prices of domestically produced goods — will rise.

Even so, domestic producers in the US are content to give Donald Trump political mileage, as this is largely a consumers’ problem. They may benefit from reduced competition.

Although higher prices of imported intermediates may incentivise domestic production, itis unclear how long this will take. During the Second World War, Olivetti reconfigured its typewriter plants to produce machine guns for the Italian army in just three months. But that was under wartime patriotic fervour and Mussolini’s dictates. Can Mr Trump inspire the same response among US manufacturers?