Donald Trump has unilaterally imposed a tariff of 25% plus a penalty on India for trading with Russia and China despite the fact that the USA is also buying from Russia as well as China. However, India and the USA are negotiating an interim trade deal and this announcement has come amidst the series negotiations!
One may wonder what could be the possible reasons? Is it an abrupt announcement by Trump? Or a well thought strategy of the Trump Administration?
There are a few reasons which are forcing the USA to take such steps. First, India has taken a very tough stand on the issue of agriculture, dairy and some metals and is not ready to give any space to any country in these categories and the USA is desperately looking for new markets for its agriculture and dairy products. Second, the US realizes very well that the innings of the US as the most powerful economy in the world is going to be over soon in a decade and the export business of dollars wouldn’t continue unchallenged for long. Not only BRICS but many other countries are also looking for alternatives to the US dollar.
So this is not an abrupt announcement by Trump but a well-thought pressure building strategy by the US administration so that the US may have more bargaining power and upper hands in the ongoing interim trade deal.
Whatever Trump is doing, at face, may look very unfortunate and a great setback for India. If one looks carefully at these, these are indeed negative developments for India in the short term. But if India plans and executes in the right direction for the medium to long term, it would prove to be a boon for India and the Indian economy. But India needs to be strategic rather than reactive.
Whatever Trump is doing, at face, may look very unfortunate and a great setback for India. If one looks carefully at these, these are indeed negative developments for India in the short term. But if India plans and executes in the right direction for the medium to long term, it would prove to be a boon for India and the Indian economy. But India needs to be strategic rather than reactive.
Trump has instructed Meta, Google and other companies to hire less Indians. If India gives the right ecosystem here in India, the brain drain that happens everyday would reverse completely which would lead to new enterprises in India. Also India must focus on low tech and labour intensive products to become a major exporter to other countries as China is gradually being replaced by Vietnam and India can fit that space very easily.
Rajeev K Upadhyay
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