The Game of Trades

As American tariff walls continue to rise, supplies to the U.S. market are reportedly shrinking. The new imported materials are either eating profits or driving up prices on American streets. This rise in core inflation would soon compel policymakers to increase interest rates, dramatically opposed to Trump’s demand for lower borrowing costs for American business. May God bless the Fed Chair Powell and, of course, the Trumpian MAGA dream.

In February, Trump outlined his ambitious plan to build a new economic corridor connecting India to the USA and Europe, vowing to double U.S.-India trade to $500 billion. Fast forward six months, and he calls India “a dead economy” and hampers US-India trade with double tariffs.

The Indian economy is not dead, nor is a double tariff on India confirmed. However, the uncertainty surrounding the U.S. tariff regime and the fickle Trumpian foreign policies will surely kill the trust of America's trading partners and undermine its foreign economic relations.

The United States has accused India of financing the Russian war and has imposed a penalty tariff for importing oil from Russia. The trade data from the past four warring years, however, expose nothing but Western hypocrisy. While professing support for Ukraine peace, Western nations have prioritised their own economic interests, continuing to import Russian goods directly or through India. They settled their Russian import bills while simultaneously showering Ukraine with loans and military aid, all without facing any American penalty. This clearly indicates that India is being unjustly penalised for maintaining neutrality in the Russia-West rivalry and for not fueling the Ukrainian war machine like the Western countries.

Some experts argue that India could not bag the best bargain as it did not rush to the White House to sign a trade deal! However, a closer look at U.S. trade agreements with those early birds reveals a troubling trend: all these agreements proclaim, ”Buy my weapons, buy my Boeing, put my oil and let your funds fly to me!” These trade deals are inexplicit and seem to be one-sided, with America being the major beneficiary. Haste makes waste. It’s worth noting that these early trade partners contribute only 40 per cent of the US trade. Whereas, Canada, China and Mexico, the top US trade partners, are still negotiating for a fair deal, much like India, taking a thoughtful strategic approach to beat the bully.

Additionally, there are underlying hints that Trump's tariff penalties on India may be linked to India's rejection of his claim on brokering the India-Pakistan ceasefire. It is evident that Trump is wielding tariffs as a coercive economic tactic to force India into accepting an unfair trade deal. Meanwhile, he has significantly reduced tariffs on Chinese imports, slashing them from 145 per cent to 30 per cent and from 125 per cent to 10 per cent.  Unexpectedly, he did not impose penalties on China, the largest Russian importer; instead, he agreed to an extended tariff ceasefire. America is realigning, some may contend, but wait, they have yet to read Trump’s chip deals.

The Unipolar moment of America is over. Trump’s US-Japan trade deal is going nowhere. Japan has wisely opted to invest in India and support the Global South, rather than giving $500 billion hafta to the USA to secure a tiny trade quota that yields no real return. At the same time, China restricted Nvidia over a 'backdoor threat' shortly after the U.S. opened the market to the chip manufacturer for a 15 per cent cut on Chinese sales. Furthermore, China rejected 300000 tons of America's soybean shipment. Now that the Chinese prefer Brazilian soybeans in their dark sauce, American policymakers will soon land in the soup. Just five days after the Trump-Putin meeting in Alaska, Russia escalated its military strikes and targeted U.S. investments in Ukraine. The message is loud and clear: America’s coercive statecraft is losing its strength against its adversaries. The Trump Tariff Walls are so high and tight that they left no passage to a “friend” to trade with ease, pushing old allies closer to America’s rivals. Now, India is working to mend ties with China and strengthen its trade with Russia, defying Trump’s threats to increase tariffs. The repercussions of Trumpian short-sighted deals are becoming apparent with each passing day.

The EU has opened its market and pays flattery to the American President, freely, ensuring that America continues to share its security burden and does not pull out from the Ukraine deal. This would be a strong deviation from what Trump had promised to scale down America's military involvement.  Nevertheless, this trade relation is and will remain vulnerable to Trumpian unpredictability and randomness.

In stark contrast to this chaos, India remains an exemplar of stability and trade worthy, calm and committed in its every domestic and international commitment. It has diversified its markets and is working to build its own supply chain. Soon, India will gain the economic advantage that America has lost.

(The writer is a foreign affairs expert. Views personal.)