Trump’s unilateral Tariff rates have put on hold many investment projects

Continuing trade uncertainty has adverse impact on planning for future

- BY KUNAL BOSE

Leading economist and professor emeritus at Jawaharlal Nehru University Prabhat Patnaik has likened the weaponization of tariffs by the US President Donald Trump to beggar-thy-neighbour policy for naked aggrandisement of his country’s business and commerce.

Rarely used by major countries, the policy is tantamount to building protectionist walls mainly through unreasonably high tariffs (remember India is still to live down the image of a ‘tariff king’ despite the process of lowering of import duties began following 1991 reforms), import quotas and subsidisation of exports. Giving protection to domestic industry overtly and covertly as China is widely accused of doing, militates against the principles of free trade. It also is an antithesis of what all the World Trade Organisation (WTO) stands for and the spirit of trade negotiations among countries for improved access to each other's market.

The US has for long been the citadel of capitalism. It will be recalled that the US was among the key drivers that built WTO in 1995 as successor to the General Agreement on Tariffs and Trade (GATT). The twin objectives were to make global trade liberalisation a continuous process and create a robust institutional framework for resolution of trade disputes. Whatever good work WTO may have done in the last 30 years and that definitely includes anti-dumping agreement, which bars member countries to introduce anti-dumping measures arbitrarily is now being undermined by President Trump’s tariff threat and demonisation of the institution by the political right in the US.