Impact of the US's Tariffs on Global Trade
Swami Vivekananda's notion of the world as a gymnasium for strengthening contrasts with the current state of global trade under the US’s tariffs, which are likened to a wrestling mat. The US has negotiated trade deals individually with countries, often to the detriment of multilateral agreements.
US Trade Policies and Impact
- The US has leveraged tariffs to influence trade deals, even with large entities like the European Union.
- China remains a significant opponent, using its control over rare earths as leverage.
- India faces substantial tariffs, including a 25% penalty on Russian oil imports, higher than most other countries.
Trade Barrier Index 2025
- The US ranks 61st globally in trade protection, factoring in non-tariff barriers (NTBs) and service restrictions.
- New tariffs could see the US fall to 113th out of 122 countries, reminiscent of the 1930 Smoot-Hawley Tariff Act.
- In East Asia, countries like Taiwan and Malaysia are more open compared to highly protected Korea and China.
Global Economic Impact
- The US’s tariffs breach World Trade Organization rules, potentially leading to global economic decline.
- The World Uncertainty Index, a measure affecting investments, remains high.
India's Economic Dilemma
India faces a challenging situation with the US:
- Its export industries, including gems and pharmaceuticals, could suffer due to the 50% tariffs.
- India's export target aims to reach $2 trillion by 2030, with the US as a crucial market.
- India struggles to balance US demands with its agricultural sector's protection.
Potential Strategies for India
- India could reduce its trade barriers to form a beneficial agreement with the US.
- India should pursue deals with the EU and consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Conclusion
The current tariff situation could jeopardize US-India relations, despite strategic partnerships like QUAD. The Indian diaspora's influence in the US might play a role in preventing further deterioration. The stakes for both nations are significant.
