Trump’s tariff wars provide a window of opportunity to Bharat for proving its mettle as a global force to reckon with its own economic development model.
K.A.Badarinath
There’s a huge body of analyses on possible impact of tariff orders signed by US President Donald Trump in last few weeks.
Those in favour and against have argued emphatically leaving room for further discussion given that tariffs, trade and economic engagement has gained pre-eminence and a developing story.
Several analysts described recalibration of tariffs as trade war. Yet others have attempted to look at implications of the trade centric conflict overflowing into geo-political stratosphere.
Markets – equities, currencies, commodities, bullion and a host of financial products – felt the immediate impact. There has been roil in the market place.
Billions of dollars’ worth investors’ wealth either vanished over night or partially restored as tariff orders were released by the White House in quick succession beginning ‘liberation day’ as Trump pompously described.
Companies, services providers and logistics firms scurried for cover even as President Trump essentially targeted European Union with whom US has a trade deficit of $ 200 billion and China with deficit exceeding US $ 300 billion.
Sixty countries – friends and foes – were treated by Trump with derision and slapped with counter-tariffs to bring down the US trade deficit that piled up to US $ 1.2 trillion. Some economists also pointed to trade surpluses run by US with about 100 countries which were royally ignored by ‘transactional Trump’ administration.
Trump’s political agenda in run up to 2024 Presidential campaign centred around correcting the ‘unfair’ ripping of American people, businesses and denying his ‘voters’ the job opportunities thereby shifting manufacturing out of US.
This is also the biggest ‘political agenda’ item of Trump that got him into power for a defining second four-year term.
Apart from addressing domestic core whites’ constituency that were central to his ‘Make America Great Again’ agenda, Trump’s belief centre’s around ‘lifting the burden of American people’ on whose shoulders the world rejoices.
Now that the trade, tariffs, manufacturing and jobs agenda gets to be implemented in US, the signals are ominous for anyone and everyone to pick up and put their counter-offensive in place.
A lot of counter-offensive from US trade partners was kept on hold as 90-days 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 US. China that countered with 84 per cent tariff on US goods and services was not part of the 90-days pause plan announced by President Trump.
For now, trade war has turned direct and vicious between US and China while the latter owed ‘fight to finish’ action plan.
Trade centric war is evolving and one may not see much hope in bringing this to an early close as negotiations between trade partners and US would be a long drawn process.
Even if trade issues are sorted out, the impact would be profound on Western model of ‘globalization’ that got rolled out post-World War II and setting up of Bretton Wood institutions is bound to hit reset button. A fresh look at global trade and economic engagement is something that’s unavoidable or rather inevitable. This re-engagement will have huge bearing on socio-economic development paradigm of global communities especially with larger number of people reeling under poverty.
A more America-centric economic policy roll out by Trump and ‘inward’ looking framework would lead to conceding geo-political and economic space to big players like Communist China.
Each country – big or small – will have to learn fast to fend for itself and not depend on big brothers in either US, China or European Union.
Next four years may also see ‘many more’ socio-economic self-reliance campaigns. It’s in this context that Bharat’s ‘self-reliance’ campaigns being run last eleven years would gain significance as existing value chains get rejigged, decoupling and re-engagement were 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 a hurry, announce counter-measures in a huff like several members of European Union or China, Bharat fell back on ‘time tested’ autonomous policy postulation.
Free Trade Agreements (FTAs) with US, European Union and United Kingdom may have to be reworked with other economic parameters like investments more closely aligned.
Secondly, given that Bharat has been treated ‘even handed’ with 26 per cent additional tariff, New Delhi should resist the temptation of falling into anti-US blocks. This should not translate to closing the door firmly on China that offered to align with Bharat to take on US.
Thirdly, Bharat may consider making new partners on equitable and respectable terms that’s ‘mutually beneficial’ and ‘long lasting’ while economic engagement takes on new hue and different shade.
Fourthly, measured and nuanced approach to trade, economic, development and geo-political engagement may have to be pursued in the spirit of ‘vasudaiva kutumbakam,’ the world is one big family.
Fifthly, given that Bharat is on an ascent mode, wading through economic uncertainties globally and achieving its objective of becoming a ‘responsible economic power house’ will have to be carefully crafted.
Sixthly, open, flexible, rules and regulations driven economic engagement with a ‘human face’ in reaching out to last man standing in queue should be basis for Bharat’s approach.
Seventhly, this is the perfect time and context to present its own model of socio-economic development model that’s not exploitative, solely driven by consumer centric approach and instead push for synergies between nature and human living that’s sustainable in terms of judicious utilization of resources.
Eighthly, realignment of global forces, both geo-political and market centric, is inevitable. And, carving out a distinct role for itself with responsibility is what’s recommended.
Ninthly, falling back big on indigenous knowledge, development ecosystem based on sanatan Dharmic values for shared prosperity will test Bharat’s mettle.
Tenthly, leadership role cannot be played from a position of weakness and Bharat gaining economic muscle will enable it to play a larger role.
(Author is Director and Chief Executive of non-partisan New Delhi based think tank, Centre for Integrated and Holistic Studies)
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