Shiban Khaibri
The most disturbing development , if any , after the challenging epidemic of covid , currently faced by the country ,is the war of exorbitant tariff rates thrust on us by US President Donald Trump who has unfortunately emerged as an increasingly maverick politician in his second term. The rates of tariff have not been reviewed somewhat reasonably upwardly in ordinary course of business supported with cogent reasons but looking to sweeping 50% straight against this country , these are seen and felt as arbitrary, highly discriminatory , unjustified, uncalled for and thus totally unacceptable as, such tariffs are striking at the roots of normal bi-lateral trade. Such high tariffs , when analysed, are neither with any economic rationale nor with any legal standing but seem to be geo-political in nature .If it is said that such an action of Trump administration is politically vengeful , perilous in content, impractical in shape and structure , contradictory in operation as also smacking of any commercial sense which could be called as nothing short of imposition of sanctions, it will not be any over statement .
Using the gamut of tariff as a tool to intimidate, as a weapon to terrorise, as a means to establish hegemony and one-upmanship as is evident by the exorbitant rates imposed by Donald Trump, it was definitely going to disturb the otherwise delicate equations of bi-lateral trade affecting not only Indians but American citizens too. We know how much healthcare is costlier in the US as compared to most of the developed countries and with higher taxes on Indian pharmaceutical products , the position there was going to worsen , agreeably a cause of concern for our drug-makers and exporters too. Needless to add, Indian exports of drugs and pharmaceuticals to the US are to the tune of nearly $ 13 billion annually. Not going into the nitty-gritty of the entire gamut of such inordinate and preposterous levels of tariffs against Indian exports to the US, tariff diplomacy employed by Donald Trump was going to backfire at home too as each American household was going to be placed at a disadvantageous position to the tune of over $2400 as an average short term income loss. Direct effect of tariff induced inflation on American economy was bound to bring in more problems than any “massive inflow of Dollars” as claimed by the American President on account of massive high tax regime on its imports from other countries. The United States is conscious of facing an imminent crisis on account of its deficits and debt levels and any increase in its earnings by way of massive tariff hikes to offset the position was unlikely as the affected economies like India could find alternate routes either to sell off their goods and products and promote multilateralism or cause the US to review the unrealistic hike in tariffs. Why not, the US being the world’s largest importer and second largest exporter has more stakes than more gains from out of the expected proceeds of hiked tariffs.
Immediately preceding the decision to hike the tariffs of Indian goods, a wholly misplaced and far from any realism narrative of the Indian economy being a “dead” economy was peddled by President Trump throwing to winds all existing and operating parameters and variables in terms of the Indian economy being , on the contrary, a fastest growing economy with a GDP of 6.4% as against that of the US with an abysmally less than 2%. The false and motivated narrative of ”dead” economy , let us assume for a moment , warrants a considerate , friendly , helpful and cooperative trade partner rather willing to offer even concessions. How can it be accounted for that a supposedly “dead” economy was going to receive severe blows like super hiked tariffs and brazenly justified the same unless both the narrative of “dead” economy and imposing higher tariffs had lot more to do with politics than anything for commercial , economic and mutual trading considerations?
We buy oil from Russia and how can a country of 140 crores with the hard earned tag of being the largest democracy of the world and an independent, sovereign country emerging as an economic force to reckon with, toe to the dictation of the US not to buy oil from Russia and thus help the US in imposing economic isolation on Russia ? When the US imports fertilizers, uranium, chemicals and numerous products from Russia, why bullying tactics adopted against us? We have to strengthen , protect and guard our own economic interests , interests of our people , monitoring levels of inflation , interests of our agriculture and farmers and so on. India’s policies -India will decide, not America. Free trade should not be axed and economics and vengeful or hateful politics should not be mixed together.
India cannot afford to remain complacent on the issue as these high tariffs , if put into operation, means India’s net GDP exposure to such senseless hike of tariffs to be in the range of 1.2 to 1.3% . It may be recalled that our exports to the US stood to the tune of $87 billion in FY 2024-25. Is the US thus pushing India to China to explore common trading and commercial interests as is evident from Prime Minister Narendra Modi scheduled to visit China this month to attend SCO summit and China openly showing enthusiasm about such a visit calling it a “gathering of solidarity and friendship”. Will America celebrate such a move or lament over it or add this one also into its long list of unnecessarily stirring up hornets’ nest(s) . Already such a move of the US means for us to move further closer, more and more, to Russia as that country has always stood by us , proved to be a deeply trusted friend and never demanded any pound of flesh to suit its political ends at the international level.
Unfortunately, some of our opposition party leaders may celebrate such difficulties which this country has been subjected to as the “dead” economy narrative of Maverick Trump was endorsed by no less than the LoP by saying, “Everybody knows that Indian economy is a dead economy, I am glad that President Trump has stated a fact, don’t you know , the whole world knows it.” He , however, did not forget to bring into this issue also the same oft and oft and more repeated “Adani ” factor. Is it not quite unfortunate that India’s leader of opposition in the Lok Sabha should feel “glad” over Trump stating the ”fact” of Indian economy being dead? If facts and figures right from 2014 to date are stated even in brief about how Indian economy has been growing fast, that would require more space and time but one cannot but help lamenting over some of our own political leaders endorsing and supporting a leader of another country showing India down . Highest GST collections of $270 billion last year , 25.60 million vehicles sold, exports $825 billion , Foreign Exchange reserves $825 billion (all time high), 46 million jobs created, Income tax collections 31 lakh crore, are just a few parameters of our vibrant strong and fast growing economy as of 2024-25.
We are a strong nation, optimistic, resilient , buoyant and not easily giving up in our quest to turn worst adversities into opportunities and we have shown to the world how a calamity so horrendous and seemingly unmanageable like the epidemic of Covid when we, not only produced indigenously manufactured vaccines and more than 2.2 billion doses were administered but helped many developing countries too which was lauded by the IMF Chief Economist by saying, “India played a key role in despatching vaccines to many countries, if you look at where exactly is one manufacturing hub for vaccines in the world – that will be India”. Does the US not feel conscious of the fallout of such a fallacious and highly arbitrary decision of virtually penalising Indian goods and services in that country? Kurt Campbell, former US Deputy Secretary of State fears Indo-US relationship being under threat because of tariffs . He feels that “America’s most important relationship in 21st century is with India and much of that is now under risk.” Can Trump afford to bear such risk and the consequences thereof or open fast channels of negotiations and talks to resolve the issue to revert to its existing position. That remains to be seen . We do not want to see “Trump punishing Trump ” by going ahead with the massive hike in tariffs against us as the circle of free trade operations, reasonable tariffs and taxes, credit, mutual trust, co-operation, understanding, and the like should not be made vicious and non-operative.
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