Trump’s tariff regime is causing turmoil. What should India do? – DairyScoop

The tariffs that US President Donald Trump announced early last month — 10 per cent on Chinese and 25 per cent on Canadian and Mexican goods — have led to a full-blown trade war. China has hit back with 15 per cent duty on wheat, corn, cotton and chicken and 10 per cent on soyabean, pork, beef, fruit, vegetables and dairy products from the US. These tariffs — coming even as the Trump administration has imposed an additional 10 per cent levy on Chinese goods — are significant: China is the largest market for US soyabean and cotton, and also a big buyer of its beef, dairy, pork and poultry meat. If these agricultural products from the US now turn more expensive and Chinese importers switch to alternative suppliers — such as Brazil, Argentina and Paraguay in soyabean — the loser would be the American farmer. Trump, incidentally, won almost 78 per cent of the popular vote in the US’s most farming-dependent counties during the 2024 presidential elections.

But the trade wars are not limited to China or Canada and Mexico. The blanket 25 per cent tariffs on the latter two countries’ goods took effect on Tuesday, with Canada too retaliating with duties on some $155 billion worth of US imports. Trump has also announced worldwide tariffs of 25 per cent on steel and aluminium to take effect from March 12. On top of these are his proposed “reciprocal tariffs”, which translates into the US charging the same duty on imports that the exporting countries levy on goods from America. That will affect virtually every country with which the US trades, both as a goods importer ($3.3 trillion in 2024) and exporter ($2.1 trillion). As the US increasingly cuts itself from imports, the result would be higher inflation, forcing the Federal Reserve to hike interest rates, which will, in turn, lead to further capital outflows from emerging market countries such as India. In short, this is a massive global disruption unfolding.