India must not let Trump's stance on tariffs weaken its global trade

Negotiating a way ahead may be hard but we should keep import duties low and strike trade deals to make the gains we can

- NIRANJAN RAJADHYAKSHA

Game theorist Thomas Schelling once wrote that coercion depends more on "the threat of what is yet to come than on damage already done." He added that countries in conflict situations would want "an impressive unspent capacity for damage be kept in reserve." Schelling wrote his classic works on strategy in the context of the Cold War between the United States and the erstwhile Soviet Union, two superpowers with massive stockpiles of nuclear weapons.

His words should resonate again as US President Donald Trump opens his second innings at the White House with threats of tariffs against countries that he believes are harming the economic interests of his country. The way Trump suspended broader tariff hikes on imports from Canada and Mexico makes many believe that this will be his game plan—threaten a country but not carry out his threat.

The problem is that soon others will begin to see his words as a series of hollow threats which will not be carried out. He will, at some point, have to impose punitive tariffs on some major country or economic bloc so that his statements are seen as credible by the rest of the world. A street bully has to occasionally beat someone up for others to fear him.