Donald Trump at it again

 Donald Trump’s trade Brouhaha- where is Trump heading? 

By: VK Bahuguna

(The writer is a former Director-General and Chancellor in Environment Ministry and Chairman of Centre for Policy Research. He is a policy analyst and columnist)

All over the world specially the many people in India felt happy and reassured after Donald Trump won his second term as US President and took office in January 2025. A large number of people felt that Democrats have been patronizing the destabilizing forces like the so called ‘Deep State’ which under the guidance of CIA actively promotes anti-India forces, supports Pakistan, support disruption in countries not following American dictates. Many people and media specially blamed the deep state for removing the Sheikh Hasina led Awami League government in Dhaka when she refused to allow US base in St Martin Island and trying to creating disruption during 2024 General elections in India. The narrative may or may not be true but if there’s an iota of true in it then it is not a party-based thing in America but American systems’ well-oiled strategy to act as a self-appointed policeman of the world and thus is the US state’s departments avowed policy to rule the world through proxy regimes and upset those who run an independent line. Because of this the United Nations ahs also become a futile body unable to achieve its lofty objectives.

Most of the Indian writers and media were hopeful that the personal chemistry between the Prime Minister Narendra Modi and President Trump developed during his first term will help forge better relations between two countries. But Trump is Trump once in Chair he thought he need not to placate the immigrant voters now like he organized  ‘Howdy Modi’  community summit in 2019 at the NRG stadium in Houston, Texas on September 22, 2019 and now want to show the American people that his policy is ‘America first’ and trade first and want to be remembered as the best President of America and also hoping to win the Nobel Prize for peace. He thinks world leaders should follow his dictates and the first sign was his snub to the President of Ukraine in full view of Media and ultimately after few days forcing him to sign the arm deal in return for control on Ukraine’s minerals. After taking over, he grew more and more arrogant and developed a fad for replacing diplomacy with trade. He started threatening India and terming it as the ‘Duty King’ in trades after he was snubbed for his vacuous repeated claims of brokering peace between India and Pakistan during the Operation Sindoor launched by India as retaliation for Pahalgaon killing by terrorists on 22nd April 2025. Now ultimately, he had announced a 25% additional duty on Indian Imports blaming India for its higher duties for the 45-billion-dollar trade deficit and a fine for Russian import of oil. Trump had done this when the free trade talks between two countries were nearing the end. It seems he got annoyed that Indian steadfastly refused to open its agriculture and dairy sector and other sectors impinging on the national interests specially the 8-crore dairy farmer’s interest. India had to protect its farmers interest as US agriculture is highly subsidized. No country will accept this kind of fiat and it will be a political and economic hara-kiri for any political party ruling in Centre. Now let us discuss its impact on India as well as America. 

Indian people are not amused by Trumps action but the mandarins in Pentagon and White House must be scratching their brains in disbelief that what fine geo-strategic relations they had built with India so assiduously during last 15 years is going to be upset to a large extent if not fully. Mr Donald Trump need to introspect be advised by the saner elements in his administration that he should go for soul searching and ‘first catch his hare’ rather than blaming India and its economy as dead. He should look into his own collar first. This ill-conceived decision could have several unintended consequences that may undermine America's long-term interests and close friendship with India a major emerging power and economy. While the policy aims to address trade deficits and India’s ties with Russia, it risks backfiring in economic, geopolitical, and strategic ways. It is however, also a fact that the U.S. is India’s largest export market, with $87.4 billion (according to US sources but Indian source put it $77.5 billion) in goods exports in 2024 (17% of India’s total exports). Key sectors like pharmaceuticals ($9 billion), textiles ($8 billion), gems and jewellery ($11 billion), and IT hardware ($4 billion) face higher costs, potentially reducing competitiveness. A 25% tariff could shrink India’s U.S. exports by 10-15%, with estimates suggesting a $8-12 billion annual loss, based on flexible trade models. However, being an emerging economy with a large market, it will survive this US action like it did the US sanctions after the atomic explosion in 1999.  India supplies 40% of U.S. generic drugs. Higher tariffs could raise costs for U.S. consumers, and the brand conscious consumer and doctors will in any case will prefer still to buy Indian medicines at the higher costs though some loss of market share to competitors like China or Mexico may occur. There will be a huge supply chain disruption will cause shortage of pharmaceuticals and other components particularly in labour intensive sector where India has big advantage. Further, JP Morgan has estimated that tariff could increase US inflation by .02 % and reduce global GDP to 1,4%. Indian pharmaceutical sector is robust and would diversify to other countries and US citizens will have to face higher prices for the medicines. Similarly, the gems and jewellery brands will not be much affected as we have not much competition globally. 

Further, The US administration also consider the other factors other than trade only for the actual contribution of India in US economy. They must not forget that more than 3 lac Indian students constituting 18 % of all foreign students admitted annually in US Universities are enriching US economy by paying 24 billion US dollar as tuition fee, accommodation and other living expenses. The American consulting firms are also getting benefits estimated to be over 10 to 12 million dollar every year. Thus, if we calculate the flow of money to US the so-called trade surplus of $44 billion for India is nowhere in real   term and in today’s globalization and international relations it will be big price American administration will have to pay by antagonising India a crucial ally in the Asia-pacific region to counter China with shared interests. The advisors of Trump must advise Trump to realize that Quad will be dead if India walks out and move more closer to Russia and Brick nations. Now Mr Trump and his friends in Europe must also realize that their hypocrisy on Russian oil and Indian Jet fuel is not a secrete.  During 2024 European union had a bilateral trade with Russia to the tune of Euro 67 billion in goods and another Euro 17 billion on services in 2023. Indian import of oil from Russia is a compulsion but what is the compulsion for Trump and allies? Trump has been clever enough for exempting jet fuel from India this extra duty. Hope good sense prevails and this announcement may be a last-minute pressure for bargaining in the trade talks. Let us hope diplomacy will be winner not knee-jerk hullaballoo. 1250 words