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Trump’s tariff wars provide a window of opportunity for Bharat to prove its mettle as a global force to reckon with, showcasing its own economic development model There is a huge body of analysis on the possible impact of the tariff orders signed by US President Donald Trump in the last few weeks. Those in favour and against have argued emphatically, leaving room for further discussion, given that tariffs, trade, and economic engagement have gained preeminence and remain a developing story. Several analysts have described the recalibration of tariffs as a trade war.
Others have attempted to examine the implications of the trade-centric conflict overflowing into the geopolitical stratosphere. Markets — equities, currencies, commodities, bullion, and a host of financial products — felt the immediate impact. There has been turmoil in the marketplace.
Billions of dollars’ worth of investors’ wealth either vanished overnight or was partially restored as tariff orders were released by the White House in quick succession, beginning with ‘liberation day’, as Trump pompously described it. Companies, service providers, and logistics firms scurried for cover even as President Trump essentially targeted the European Union, with whom the US has a trade deficit of $200 billion, and China, with a deficit exceeding $300 billion. Sixty countries — friends and foes alike — were treated with derision by Trump and slapped with counter-tariffs to bring down the US trade deficit, which had piled up to $1.
2 trillion. Some economists also pointed to trade surpluses run by the US with about 100 countries, which were royally ignored by the ‘transactional Trump’ administration. Trump’s political agenda in the run-up to the 2024 Presidential campaign centred around correcting the ‘unfair’ exploitation of the American people and businesses, and denying his ‘voters’ job opportunities, thereby shifting manufacturing out of the US.
This is also the biggest ‘political agenda’ item that got Trump into power for a defining second four-year term. Apart from addressing his domestic core white constituency, which was central to his ‘Make America Great Again’ agenda, Trump’s belief centres around ‘lifting the burden of the American people’, on whose shoulders the world rejoices. Now that the trade, tariffs, manufacturing, and jobs agenda is being implemented in the US, the signals are ominous for anyone and everyone to pick up and put their counter-offensive in place.
Much of the counter-offensive from US trade partners was kept on hold as a 90-day window to fast-track trade and economic partnership negotiations began in Washington, DC and elsewhere. China, however, has been treated differently after having slapped 145 per cent duties on most goods and services exported to the US. China, which countered with 84 per cent tariffs on US goods and services, was not part of the 90-day pause plan announced by President Trump.
On Friday, China’s Ministry of Finance announced that it had raised additional tariffs on US goods from 84 per cent to 125 per cent, further escalating the trade tensions. For now, the trade war has turned direct and vicious between the US and China, with the latter pursuing a ‘fight to the finish’ action plan. The trade-centric war is evolving, and one may not see much hope of an early resolution, as negotiations between trade partners and the US are likely to be a long-drawn-out process.
Even if trade issues are sorted out, the impact on the Western model of ‘globalisation’ that rolled out post-World War II with the setting up of the Bretton Woods institutions is bound to hit the reset button. A fresh look at global trade and economic engagement is something that is unavoidable, or rather inevitable. This re-engagement will have a huge bearing on the socio-economic development paradigm of global communities, especially with a large number of people still reeling under poverty.
A more America-centric economic policy rollout by Trump and an ‘inward-looking’ framework would lead to conceding geopolitical and economic space to big players like Communist China. Each country—big or small—will have to learn quickly to fend for itself and not depend on the so-called big brothers in the US, China, or the European Union. The next four years may also see ‘many more’ socio-economic self-reliance campaigns.
It is in this context that Bharat’s ‘self-reliance’ campaigns, being run for the last eleven years, would gain significance as existing value chains are rejigged, and decoupling and re-engagement are definitively on the horizon. Bharat’s ‘strategic autonomy’ in terms of foreign policy, and by extension, economic engagement, will hold strong. Unwilling to react in haste or announce counter-measures in a huff like several members of the European Union or China, Bharat fell back on its ‘time-tested’ autonomous policy postulation.
Free Trade Agreements (FTAs) with the US, the European Union, and the United Kingdom may have to be reworked, with other economic parameters such as investments more closely aligned. Secondly, given that Bharat has been treated ‘even-handedly’ with a 26 per cent additional tariff, New Delhi should resist the temptation to fall into anti-US blocs. This should not, however, translate into closing the door firmly on China, which has offered to align with Bharat to take on the US.
Thirdly, Bharat may consider making new partners on equitable and respectable terms that are ‘mutually beneficial’ and ‘long-lasting’, as economic engagement takes on a new hue and different shade. Fourthly, a measured and nuanced approach to trade, economic development, and geopolitical engagement may have to be pursued in the spirit of ‘Vasudhaiva Kutumbakam’ — the world is one big family. Fifthly, given that Bharat is in ascent mode, wading through global economic uncertainties and achieving its objective of becoming a ‘responsible economic powerhouse’ will have to be carefully crafted.
Sixthly, open, flexible, rules- and regulations-driven economic engagement with a ‘human face’, reaching out to the last man standing in the queue, should be the basis for Bharat’s approach. Seventhly, this is the perfect time and context for Bharat to present its own model of socio-economic development — one that is not exploitative, not solely driven by a consumer-centric approach, but instead pushes for synergies between nature and human living that are sustainable through the judicious utilisation of resources. Eighthly, the realignment of global forces, both geopolitical and market-centric, is inevitable, and carving out a distinct role for itself with responsibility is what is recommended.
Ninthly, falling back heavily on indigenous knowledge and a development ecosystem based on Sanatan Dharmic values for shared prosperity will test Bharat’s mettle. Tenthly, leadership cannot be played from a position of weakness, and Bharat gaining economic muscle will enable it to play a larger role. The author is Director and Chief Executive of non-partisan New Delhi based think tank, Centre for Integrated and Holistic Studies.
Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views..
