05 March 2025 Indian Express Editorial


What to Read in Indian Express Editorial( Topic and Syllabus wise)

Editorial 1 : Trump’s tariff regime is causing turmoil. What should India do?

Introduction: Overview of the Trade War

  • Trigger: The tariffs that US President Donald Trump announced early last month — 10% on Chinese and 25% on Canadian and Mexican goods — have led to a full-blown trade war.
  • Retaliation
    1. China imposed tariffs on US agricultural exports (15% on wheat, corn, cotton, chicken; 10% on soybeans, pork, beef, etc.).
    2. Canada retaliated with tariffs on $155 billion worth of US imports.
  • Global Escalation
    1. Steel/Aluminium Tariffs: 25% worldwide tariffs effective March 12.
    2. Reciprocal Tariffs: Proposed matching of other countries’ import duties on US goods.

 

Key Impacts

  • On the US
    1. Hit on Agriculture Sector
      • China is the largest buyer of US soybeans, cotton, and a major market for beef/dairy.
      • Risk of losing market share to Brazil, Argentina, and Paraguay.
    2. Political Fallout: Trump won 78% support in farming-dependent counties in 2024 elections.
  • On Global Markets
    1. Inflation in the US: As the US increasingly cuts itself from imports, the result would be higher inflation.
    2. Emerging Market Risks: Higher inflation will force the Federal Reserve to hike interest rates, which will, in turn, lead to further capital outflows from emerging market countries such as India.

 

India’s Position

  • Opportunities
    1. Global Trade Leadership
      • Position India as a reliable trade partner amid global disruptions.
      • Explore new export markets (e.g. fill gaps left by US-China trade tensions).
    2. Trade Liberalization
      • Reduce duties on select US imports (e.g. almonds, walnuts, corn, whiskey) to strengthen bilateral ties.
      • Benefit Indian poultry/dairy sectors via cheaper feed imports (e.g. corn).
  • Risks
    1. Retaliatory Tariffs: US could target Indian exports like seafood, basmati rice with tariffs.
    2. Domestic Protectionism: Inward-looking policies could harm India’s integration into global supply chains.

 

Way Forward: Recommendations for India

  • Proactive Trade Negotiations
    1. Engage with the US to avoid retaliatory tariffs on key exports.
    2. Leverage India’s growing consumer market in trade talks.
  • Diversify Export Markets: Reduce dependency on traditional markets (e.g. EU, US) by exploring Africa, Southeast Asia.
  • Liberalize Import Policies
    1. Lower agricultural tariffs to stabilize domestic prices and improve competitiveness.
    2. Balance protection for farmers with access to affordable inputs.

 

Conclusion: The US-led trade wars risk global economic instability, inflation, and capital flight from emerging markets. India must adopt a balanced strategy, with a long-term goal of emerging as a stabilizing force in global trade amid rising geopolitical tensions.