Trump’s New Tariff Order: Imposing Reciprocal Tariffs:-
Before meeting Modi Trump was up to something else he was signing a new order to do what to impose reciprocal tariffs president Trump gave a simple explanation for it if you charge us we will charge you say Brazil imposes a 10% tariff On Us cars then the US will impose a 10% tariff on Brazilian cars that is the classical classical definition of reciprocal tariffs you mirror the Tariff imposed on your exports but Trump is going beyond that and he is not sparing anyone here unlike his previous tariff threats this one is not targeted allies Rivals enemies Partners Trump’s .
Trump’s Motivation: Correcting Trade Imbalance and Paying National Debt:-
Latest move will affect everyone but why is he doing it apparently to ensure that America gets a fair deal listen in and they say this is going to be the thing that makes makes our country really prosperous again and this is going to what be what pays down to $36 trillion in debt and all the other things and this is going to be uh this is an amazing day this think this is going to be a very big day and in a very positive way for our country a reciprocal mix tariffs really fair so what will be the impact of this move in the US it will almost certainly lead to higher inflation but what about outside the US it’s hard to give a detailed answer now because a lot of calculations are yet to be done .
The Impact of Reciprocal Tariffs: Unprecedented Global Disruptions:-
Trump has ordered his team to get cracking they will now calculate tariff rates for each country like not just about mirroring rates Trump wants to go one step ahead he’s accounting for non-tariff barriers as well for example subsidies say India imposes a 10% tariff On Us cars the Indian government also gives subsidies to domestic car makers then Trump is not happy with 10% reci tariffs he wants to account for the subsidies as well which means that the US rate could be higher than 10% so I come back to my question what will be the impact in one word unprecedented the United States is the largest importer in the world if they impose such tariffs the damage will be immense we’re looking at Global disruptions it makes you wonder why is Trump doing it at all the US president has given two main reasons one to correct trade imbalan America has run a trade deficit since the 1970s meaning .
Why Reciprocal Tariffs Are a Bad Idea:-
They import way more than they export in 2024 their trade deficit was $1.2 trillion Trump wants to balance his trade he’s giving countries and companies two options either make in the United States or buy from the United States the second reason is to pay off America’s debt you just just heard him say that the US national debt is more than $36 trillion Donald Trump says he will use the Tariff Revenue to pay it off again the logic is not sound tariffs make up just 2% of us Revenue even if you increase it you will not make that kind of money what you will get instead is inflation and Trump has admitted this he said prices would rise in the short term .
Very much because product is being dumped into our country and our farmers are getting hurt very badly by the last Administration we know for sure by April that’s when the tariffs are expected to be imposed but for now let’s focus on two questions one why are reciprocal tariffs a bad idea and two what should countries like India brace for in an Ideal World there would be no tariffs or at least the same tariffs but we don’t live in an Ideal World in our world some countries are more developed and advanced they have a stronger industrial base hence their products will be better and cheaper imagine these products flooding a developing or underdeveloped Market their domestic industry would never flourish homemade Goods would be smothered by Imports thus we have different tariff rates and that was the established trade idea .
India’s Response to Trump’s Tariff Threats:-
Last century but Donald Trump is going against it he says the world is ripping off America which brings us to the second question now what should we brace for what should India brace for well Trump specifically called out India he said India has the highest tariffs anywhere in the world um but traditionally India is right at the top of the pack pretty much there are a couple of smaller countries that are actually more but India is a very very very they they charge tremendous tariffs that was minutes before hosting Prime Minister Modi and it tells you what we’re dealing with here a calculated business mind as for the impact let’s look at numbers first the India us bilateral trade is worth $129 billion Indian exports are at 87 billion and US exports to India are at 41 billion so India has a trade surplus with America of around $46 billion .
Potential Impact on India: Tariff Rates and Reciprocity:-
India’s main exports include engineering Goods electronic items Gems and Jewelry farma goods and information technology now these are the industries at risk and the impact well that depends on what approach Trump takes assume that he looks at how India taxes us Imports then the impact could be limited almost 75% of US exports to India attract less than 5% tariffs so reciprocity will not worry New Delhi but if Trump looks at the overall tariff rate then it could be a problem because India’s average tariff rate is 17% and America’s average is just 3.3% so like it’s all about waiting and watching India is trying to avoid a tariff war that is why Modi has agreed to buy more Us weapons and natural gas to reduce the deficit with America .