AFTER THE TARIFF TANTRUM

INDIA HAS HEADROOM TO CUT DUTIES, BUT MUST KEEP ITS ECONOMIC SELF-INTEREST INTACT

- KG NARENDRANATH

THE US UNDER Trump 2.0 unsettled the global economic order in 2025—with little regard for its own legacy as the world’s foremost advocate of free trade and open markets.

The volatile temperament of the executive head of the world’s most powerful nation turned a mammoth tariff offensive into a whirlwind affair: outrageous threats followed by sudden retreats, interspersed with opaque deal-making.

It was never a level playing field. Trump kept conjuring up fresh moves against majortrading partners. Most of them—including the EU, the UK, Japan and South Korea—capitulated with minimal protest and struck deals by July or early August, ahead of the August 27 deadline for country-specific “reciprocal tariffs”.

None of these arrangements honoured established international frameworks or the customary give-and-take of bilateral negotiations. But that was never Trump’s concern whose disdain for multilateral rules extended well beyond trade.

Trump’s dubious belief that running a trade surplus with the US amounts to an economic crime was accepted by almost everyone—except China and India. Beijing resisted by resolve; New Delhi by expediency. China, the principal early target alongside Canada and Mexico, mounted an effective counter. Trump was forced to retreat from his most extreme tariff proposals, and a truce emerged by late October. China’s leverage stemmed not only from its role as a low-cost supplier across a vast range of goods, but also from its dominance in rare earths and critical minerals—inputs vital to new-age manufacturing.