1 week Ago
Given India’s relationship with the US, it has the potential to play a pivotal role in initiating such conversations “The government, which was designed for the people, has gotten into the hands of the bosses and their employers, the special interests. An invisible empire has been set up above the forms of democracy," said former US President Woodrow Wilson, who was the architect of multilateralism through the League of Nations. His presidency coincided with the progressive era in American history, a time marked by significant socio-political reforms.
He guided the U.S. economy through World War I, during which the Congress enacted a series of laws designed to grant the President emergency powers, with the Trading With the Enemy Act of 1917 (TWEA) being the most notable.
The demands of wartime prompted the President to implement sanctions and economic restrictions, leading to the enactment of TWEA. This legislation empowers the President to manage or limit all trade between the United States and its adversaries during wartime. Throughout the 20th century, the Congress increasingly conferred emergency powers to the President through various statutes, including TWEA.
Enacted in 1917, TWEA was intended to regulate international dealings with enemy nations following the U.S. entry into World War I.
In the 1930s, the Congress broadened the act to enable the President to declare a national emergency even in peacetime, thereby granting extensive authority over both domestic and international transactions. From 1945 to the early 1970s, TWEA became a primary tool for imposing sanctions as part of the US Cold War strategy. Presidents utilised TWEA to obstruct international financial transactions, seize assets held by foreign nationals within the U.
S., restrict exports, adjust regulations to prevent gold hoarding, limit foreign direct investment in American companies, and impose tariffs on all imports into the United States. The International Emergency Economic Powers Act (IEEPA) further extends the President’s authority to regulate economic transactions.
TRUMP AND IEEPA In his initial term, Trump threatened to implement tariffs on Mexico, utilising his powers under the IEEPA. In May 2019, he announced plans to impose a 5 per cent tariff on all goods imported from Mexico, with the intention of gradually increasing this tariff to 25 per cent unless Mexico took substantial measures to address the “illegal migration crisis." By June 2019, Trump retreated from this threat after the United States and Mexico reached an agreement aimed at reducing the influx of migrants at the southwestern border.
However, he did exercise this authority to impose sanctions on other nations. Trump utilised IEEPA to target Venezuela’s state-owned oil company, aiming to weaken President Nicolás Maduro’s government by cutting off its primary source of revenue. Additionally, he applied the law to sanction Iran in response to what his administration described as aggressive actions by Tehran.
In June 2020, Trump invoked the law again to authorise sanctions against senior officials at the International Criminal Court following the court’s investigation into potential war crimes committed by American forces in Afghanistan. During his second term, in February 2025, he once more employed this Act. A presidential statement indicated that, in response to the emergency posed by the extraordinary threat of illegal immigration and drug trafficking, President Donald J Trump would implement a 25% additional tariff on imports from Canada and Mexico, along with a 10% additional tariff on imports from China.
Notably, energy resources from Canada would be subject to a reduced 10% tariff. This decisive action was taken to hold Mexico, Canada, and China accountable for their commitments to curb illegal immigration and prevent the influx of harmful substances such as fentanyl into U.S.
territory. NATIONAL EMERGENCY AND TRUMP TARIFF On April 2, 2025, President Trump declared a National Emergency under the IEEPA. He stated that foreign trade and economic practices have led to a national emergency, prompting him to implement tariffs aimed at bolstering the United States’ international economic standing and safeguarding American workers.
In accordance with the Act, the President established a 10 per cent tariff applicable to all countries. The European Union will face a 20% tariff from the US, while Vietnam will incur a 46% tariff, Japan a 24% tariff, South Korea a 25% tariff, India a 26% tariff, Taiwan a 32% tariff, and Thailand a 36% tariff. China, which recorded the largest trade surplus with the US in 2024 at $295 billion, will be subject to a 34% reciprocal tariff.
The rationale behind these tariff measures is supported by a 2024 economic analysis, which indicated that a global tariff of 10% could potentially boost the economy by $728 billion, generate 2.8 million jobs, and raise real household incomes by 5.7%.
MARKETS HIT The Nikkei experienced a significant decline of 7.83%, while the Hang Seng plummeted by 13.22%.
The BSE decreased by 2.95%, and the Sensex dropped by 3.24%.
The Stoxx 600 index fell by 4.5%, and Germany’s DAX declined by 4.13%.
In the UK, the FTSE 100 saw a decrease of 4.38%, and France’s CAC fell by 4.78%.
Meanwhile, Spain’s IBEX index dropped by 5.12%. In a troubling development for Indian markets, investors lost Rs 14.
3 lakh crore, marking the most significant decline in 10 months. Since the introduction of the tariffs, the total market capitalisation of companies listed on the NSE has decreased by 24.29 lakh crore rupees over the course of three trading sessions.
WAY FORWARD The Indian economy is currently facing challenges due to reciprocal tariffs imposed by the United States. It is essential for India to engage in discussions with the US to prevent a trade war. Traditional sectors, particularly those related to Indian agriculture and marine products, should be exempt from these reciprocal tariffs.
Swiftly finalising outstanding trade agreements with various economies, including the UK and the European Union, will aid in diversifying our export markets. Given the restrictions from the US market, it is likely that the European Union will adopt similar measures to enhance its access to Indian markets, which could benefit their businesses but may negatively impact the domestic economy. The United States remains a significant importer of Indian seafood, with imports valued at approximately US$2,549.
15 million, representing 34.53% of the total value. Currently, a tariff of 34.
26% is applied to Indian marine products, which includes an anti-dumping duty of 2.49%, a countervailing duty of 5.77%, and a reciprocal tariff of 26%.
This situation may provide a competitive edge to countries like Ecuador. The decision of the President to invoke powers under IEEPA is surely to be tested under the law, however, the decision may take time, and damage may be done. It is crucial to initiate discussions aimed at addressing the existing tariff challenges in global trade.
India should seek concessions on its agricultural and marine product exports to effectively navigate this crisis. The overarching influence of ‘the invisible empire that has been set up above the forms of democracy’ can only be countered through collaborative efforts among governments worldwide, facilitated by ongoing discussions and dialogues. Given India’s relationship with the US, it has the potential to play a pivotal role in initiating such conversations.
Adarsh Kuniyillam is a Parliamentary and Policy Analyst and has the experience of working under various Members of Parliament. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.
.
