By SANTOSH MOHANTY
The tariff strategy by the Trump administration has received a jolt after a trade court in US has ruled that the US President has gone out of his way to impose taxes on countries including India which is beyond his authority. The court said President Donald Trump has overstepped his authority by using his emergency powers in the name of economy.
Trumps's aggressive economic policy and trade war with China has become a cause for concern among the international community and of late India has also been targeted by Trump himself despite his announcement that PM Modi is one of his best friends. It is worthwhile to mention here that during his earlier presidency (2016–2020), events like Howdy Modi and Namaste Trump in US and India were sufficient enough to sent message across the world about the level, quality and weight of the friendship Modi and Trump had nutrured. True, Indians were enamoured that Modi's friendship with Trump, the most powerful ruler of the world, will bring in efflorescence to the country economically and militarily.
But, the US role after the events following the cold-blooded killings of innocent people in Pehalgam in Kashmir by Pak trained terrorists and India's airstrikes at selected terror hideouts in Pakistan is unfathomable. India continued its military operations against the terrorists in Pakistan for four days relentlessly, but the abrupt ceasefire when India had the upper hand, at the behest of American President, was not easily digested by Indians. Before India could declare the ceasefire, President Trump in his X Post(Twitter) said his administration had burnt the midnight oil for days for brokering a truce, took all Indians by surprise. In fact, most Indians and the world came to know about the ceasefire between India and Pakistan after going through President Trump's X Post which was on the air a few hours before Indian government actually declared the ceasefire.
After his X Post in which he mentioned that he mediated over Kashmir issue, President Trump even did not stop and go on saying that trade threat to both India and Pakistan worked well. During his Saudi visit, President Trump even went on the record saying Vice President Vance and foreign secretary actually brokered the deal between India and Pakistan and trade threat was at the top.
This is known to all that the US President's 'America First' policy which he has been pursuing from the first tenure during his presidency (2016–2020) has resulted in the flaunting of sheer highhandedness ignoring the interest of other nations especially India. It is hard to believe what sort of friendship is flourishing between Trump and Modi when Indians are sent back home handcuffed and stuffed in an airplane for hours allegedly without basic arrangements.
Recently, Trump has bluntly asked Apple's CEO Tim Cook not to carry out its operations in India. He virtually ordered Apple that it must not build its products in India and if it disobeys the diktat then be prepared to face the music. Although Apple is yet to abide by his instructions, it is widely believed that Trump has a clear intention of connecting his broader trade or tariff war with India also.
The iPhone market in India is already on the upsurge and the American Tech giant Apple has already stepped up its production with a view to manufacture around 25% of global iPhones in the country.
The Wall Street Journal report said Trump administration is considering temporary tariffs of up to 15% on various global goods for 150 days after the initial setback by a federal court asking the President to act within the limit and stay away from abusing emergency powers. But, the report is yet to be confirmed.
The Wall Street Journal report said Trump administration is pursuing a backup plan to continue its tariff policy following the adverse decision by the trade court. It is believed that Trump’s team has started exploring alternative approach to carry on their tariff war and the trade agenda.
The aggressive tariff policies by US in the name of America First and economic nationalism has sparked trade wars with China and this action has a potential blowback on India also. The high tariff has not only alarmed global markets, but also has given an unexpected twist to US-India relationship following President Trump's orders to Apple to wind up its business in India.
Trump started his America First policy during his first presidency (2016–2020) imposing heavy tariffs on Chinese goods with a view to whittle down US trade deficit and create more jobs for the Americans in the manufacturing sector. If we analyze his 2025 tariff policy, then he has already proposed a 10 per cent duty on all imports and more imposition of sixty to one hundred percent on Chinese products.
Will India Suffer?
It is believed that India is not directly targeted by Trump administration, but caught between US-China trade war. The global tech company, Apple, has deserted China and is currently working with Indian manufacturers in Chennai. This will create a huge upsurge in job market bringing billions in Foreign Direct Investment. But, Trump's decision to close down operations in India has severely jeopardized the prospects.
If Apple pulls out of India, then this will destroy India’s manufacturing ecosystem severely hitting country's employment markets in southern Indian states like Tamil Nadu and Karnataka. This will demolish India's export front which is hoping to become a global export hub for electronics in the years to come. The proposed high tariffs will make Indian products less competitive in US market.
In the light of Trump's trade war, it is high time that India, especially the Modi government, should take measures to pursue diplomacy with both Republican and Democratic circles in Washington. The Indian government must tie-up with US corporate sector for expansion of operations in the country. Therefore, a clear FDI policy will do well to attract the US corporates.
Options For India:
India should learn from this threat. Countries are increasingly using economic power as a geopolitical weapon for pursuing their big brotherly attitude. This is a warning, but opportunities are hidden within if properly understood. Indian policy makers must understand this possibility. The Modi dispensation in Delhi has been trumpeting for years that India will become a Viswa Guru( World Leader)in future, but this will remain as an wishful thinking if India fails to retain investors' confidence through expansion of multilateral trade.
