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Tuesday, January 21, 2025

Trump's Tariff Plans and WHO Exit: How India's Economy and Trade Relations Could Be Impacted

 

Trump's Tariff Plans and WHO Exit: How India's Economy and Trade Relations Could Be Impacted

US President Donald Trump has announced plans to overhaul the country's trade system by imposing tariffs and taxes on foreign countries to protect American interests. His proposed tariffs include:

  • A 10% tariff on global imports
  • A 60% tariff on Chinese goods
  • A 25% import surcharge on Canadian and Mexican products


Impact on India:

Trump has previously criticized India for imposing high tariffs on US products, referring to the country as the "king of tariffs." He has warned that his administration would reciprocate if India continues to levy high duties on American goods. The potential implications for India include:

  1. Increased Costs for Indian Exporters:
    • Indian businesses that export to the US, particularly in sectors such as textiles, pharmaceuticals, and IT services, could face higher tariffs.
    • This would make Indian products less competitive in the US market, leading to reduced sales and revenue.
  2. Impact on Trade Relations:
    • The US was India's largest trading partner in 2021-2022 and 2022-2023, with bilateral trade surpassing USD 72 billion in early 2024.
    • A tariff war could strain this relationship and force India to seek alternative markets.
  3. Potential Inflation:
    • Higher import costs could lead to increased prices for consumers in both countries.
    • US consumers may face higher costs for Indian products, while Indian consumers could see price hikes on US goods.
  4. Diplomatic and Policy Adjustments:
    • India might need to engage in diplomatic negotiations to secure favorable trade terms.
    • Policymakers may have to explore alternative markets and diversify export strategies.


BRICS Currency Threat:

In December last year, Trump threatened to impose a 100% tariff on BRICS nations, including India, if they pursued a common currency to replace the US dollar. This came after BRICS nations discussed reducing their reliance on the dollar in trade. India's External Affairs Minister S. Jaishankar responded cautiously, acknowledging the practicality of using local currencies for efficiency and cost-saving reasons.

US Withdrawal from WHO:

On his first day in office, President Trump signed an executive order to withdraw the US from the World Health Organization (WHO). The decision cited:

  • Mishandling of the COVID-19 pandemic
  • Failure to implement necessary reforms
  • Unfair financial burdens on the US

India, as a major stakeholder in global health initiatives, may need to recalibrate its international health strategies and strengthen regional collaborations to address global health challenges without US involvement.

Trump's trade policies and geopolitical stance present challenges and opportunities for India. While tariffs could impact India's export sector, the evolving situation necessitates proactive economic diplomacy and strategic planning to mitigate potential disruptions.

Indian Market is in downtrend since the news of Donald Trump Oath ceremony and various statements given before taking the seat. FII has been on selling spree in January 2025 they have already sold more than 57000 crores approx. $6 billion since start of this month. It is getting predicted that selling may get intensified after new announcements by Donal Trump.

 

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