The age of wars between big countries is mostly over. Now conflict has taken other, relatively more abstract protectionist forms. This week’s buzzphrase is trade wars: it’s full-blown, and global. India won’t see the levels attained by the retaliatory tariff blitz between US-EU or US-China, but it has joined in full measure, as one of the major economies of the world. That itself is a sign of changing world equations, not a particularly comforting thing.
Sure enough, the Dow took a hit as everyone woke up to the established order going awry. US President Donald Trump acted out his protectionist impulse and circled his wagons. To grant a point, the EU had imposed prohibitive tariffs on US steel and aluminium. India was fated to be dragged into it; this was evident from Trump’s comment at G7. When he pulled out of the G7 rubric of “rule-based trading”, cribbing that his country was being treated like a “piggy bank everybody is robbing”, he drew us into the loop of ‘everybody’.
Well, India has lived up to its threat potential and gone ahead and proposed hiked duties on 29 US trade items—almonds, walnuts, apples, Bengal gram and finished stainless steel items among others. Plus, an additional 10 per cent on lentils—to stop oversupply. Together, it would amount to $240 million additional revenue for India. So what Trump may achieve by appeasing the US steel lobby, his vote bank, he would lose on the farm export front.
Despite India’s modest volume of trade with the US, Trump obviously has us in his crosshairs. Remember the Harley-Davidson jibe in February? The implication of the US tariff hike on Indian steel and aluminium will be about $241 million, not much compared to the $450 billion imposed on China. Nonetheless, this petulant war is better resolved than heightened. Trade needs stability, a degree of predictability. India, of course, has kept a window: the new tariffs will kick in on August 4. Hopefully, when the US trade team lands here next week for negotiations, better sense will prevail, on both sides.