New Delhi has much to navigate in this unpredictable Trump era

India must stay alert to the risks and opportunities that arise as the US leader pushes global trade patterns into turbulence

- SHYAM SARAN is a former foreign secretary

President Donald Trump promised a trade war and has fired the first shots. The US leader has chosen to use cannon balls rather than mere bullets, imposing a 25% tariff on goods imported from Mexico and Canada and 10% on imports from China (he had threatened 60% before assuming office). On 3 February, both Canada and Mexico were given a 30-day reprieve, with concessions extracted from them—the beefing up of border patrols to prevent ingress of fentanyl and illegal immigrants. While both Canada and Mexico had threatened retaliatory tariffs, they too have deferred action in the wake of Trump's decision to temporarily suspend tariffs on them.

In the case of China, Trump has delayed the US crackdown on a loophole that relieved packages worth less than $800 from attracting import taxes. To this effect, he has amended his earlier order that sought to suspend the ‘de minimis’ provision for low-value imports from China.

The Chinese have replied with an array of measures—from levying tariffs (on LNG, coal, crude oil, etc) to export controls on key metals (for instance, tungsten, which finds critical application in military equipment, electronics and solar panels) and anti-monopoly investigations (against Google and bio-tech firm Illumina).

US trade partners in Asia and Europe, meanwhile, have largely escaped the tariff war so far (if we factor in the recent levy on steel and aluminum), although Trump has repeated his threats to target them as well. Trump’s aggression has not exactly kept up with his rhetoric. Nevertheless, it has had enough heft to compel trade partners to look for avenues to diversify their trade away from the US.