Trump’s 50% tariff being turned into an opportunity by team Piyush Goyal

With The doubling of tariffs on most Indian imports to as high as 50 per cent took effect on Wednesday (Aug 27), a sharp hike from the 25 per cent earlier this month, Trump thinks that he has intimidated India. To his surprise the Government of India remains unfazed with Shri Piyush Goyal taking him on and for this he has firm backing of PM Modi.


Workers in a manufacturing unit make leather footwear in Agra, nonchalantly carry on their work Donald Trump’s foolish decision will hardly be able to squeeze labour-intensive exports, threaten jobs or even dampen economic growth.

The additional levy aimed to persuade India to discontinue purchase of Russian oil has already backfired on Trump Bhai. India which is now sourcing oil from over 40 countries has in fact increased the volume being bought from Russia.

Analysts believe that this Trump tariff will have a very marginal effect on India’s GDP growth ( in USD terms by not more than 0.5% and much less in PPP terms. This is because India has a huge domestic consumption market and the demand is going to grow more with planned reduction of GST on many consumer and other goods.

India’s economy is driven by domestic demand, and that acts like a very strong shield against International fluctuations. As a nation, India’s “very big domestic market” means it is less dependent on exports than other countries.

Also India has already taken action to ensure that sectors like garments, jewellery and seafood, likely to see drop in exports to the USA, have other markets like China, Japan, Russia, Australia, UAE, Central Asia, Africa, UK and Middle East ASEAN etc. India is soon going to become a World’s manufacturing hub.

Trump Bhai has tried this kind of tactic of first raising the stakes, then playing hardball, with many countries. However this time he has chosen a faulty negotiation style and a wrong target …which has the capability of not only deflecting his moves but even hitting back, equally hard.

Though communication channels between Washington and New Delhi remain open, despite trade talks breaking down earlier this month, PM Modi has already given a shock to Trump Bhai by refusing to take his call, not once but four times. It seems Trump’s favorite, Sergio Gor the Ambassador designate to India, too may get to talk to no more than a Joint Secretary level officer in New Delhi !!!

Both sides need to manage things properly.India has already raised reciprocal tariffs on many of the goods being imported from the USA. In addition it may reduce the export volume of pharmaceuticals to the USA and divert it to Africa and South America. This move will really hurt the Americans, who will start feeling the pinch of rising inflation and costly goods from India.

PM Modi is already in Japan which has decided to increase its investments in India manifolds. Next Modi will be attending the SCO meet in Beijing. A more clear picture of things unfolding in the foreseeable future will only emerge after the meeting of Modi, Putin and Xi. The American Administration’s palpitation must be increasing by hour.

At some point the US has to come to terms that it can neither take on the big three (No 1 Economy + No 3 Economy and No 4 Economy combined in PPP terms) nor exist in isolation. The combined PPP GDP of the big three is 59 trillion International dollar against just 30.5 trillion International dollar of the USA
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Therefore Trump Bhai surely needs not only his Western allies and Japan( Trump Bhai has alienated all ) but also at least one out of the BIG THREE. He will need his “ friend “ back – India and Japan – if he wants to counterbalance the new multipolar world.
All is not over yet, till it gets over !!!!