Most countries around the world are troubled by the unpredictability, impulsiveness, and actions of one man. It is difficult to predict when and what next decision he might take or what will he completely reverse. Who will he suddenly embrace and whom he will label as enemy number one is equally difficult to predict. We are talking about United States President Donald Trump. Since taking the oath as US President for his second term, the most uttered word from his mouth has been –Tariff. He talks about reciprocal tariffs, which means that the US will charge any country the same amount in taxes that they are charging the US. Stock markets around the world have felt the side effects of Trump’s Tariff tactics.
Currently, President Trump has paused the implementation of tariffs for 90-days in over 75 countries. But his stance towards China remains hard; he is continuously raising tariffs on China, which have now increased to 145 per cent. The tariff war is between the economies of the number one country i.e., America and number two i.e., China. Neither of them is ready to take a step back.
In such scenario, question arises that how much turmoil will Trump create in coming four years of his term? Where does he want to take America to? Whether he will build his country or destroy with the agenda of Make America Great Again? Who will face the bigger loss in this trade war between America and China? Will Trump be able to isolate China with his tariff diplomacy? And why will other countries accept Trump’s call? Is the Trump wave an opportunity or challenge for India?
Trump Moving Forward With ‘My Way Or Highway’ Formula
President Trump is moving forward with the ‘My way Or Highway’ formula, which means either accept my way or go your own way. The way he is making decision and reversing them later, the biggest dent has been to the image of Super power America. Several leaders and experts must be weighing how seriously should Trump’s decision be taken with. America and China have contribution of 44 percent to the world’s GDP. In such situation, the trade war between these powerful economies is going to affect the whole world, whose trailer one can already see. Why does Trump think that America is losing so much in its deal with China?
Last year, China and the US had total trade of approximately 585 billion dollars, out of which the US imported goods worth 440 billion Dollars from China. At the same time, China purchased just 145 Arab dollar of goods from the US. This implies, that China sold three times more goods to the US than it bought. Trump now wants to change this picture. He now thinks what is the need to order goods from other countries? Why can’t manufacturing take place in America itself like China? In fact, Trump wants America to be called as the factory of the world and not China.
Trump May Not Realize Difference Between China And US
It seems that Donald Trump doesn’t have an idea of significant difference between China and America. America is a liberal democracy with many rules and regulations. While Americans have been ahead in research and innovation, China has mastered the art of creating a disciplined and cost-effective labour force for factories. This is why when Communist China added liberalisation in its economy, foreign companies saw better prospects for themselves in China. When domestic and foreign companies started to set up their industries in China, then leaders sitting in Beijing made it easier to sell the cheap goods made in their country to the world. As a result, in next few years, cheap Chinese products rocked the market worldwide. Chinese goods are dominating the market.
75 Out of 100 Americans Use Made-in-China Smartphones
Today the condition is such that out of 100 Americans, 75 can be spotted using made in China Smartphones. Not just smartphones, but laptops made in China are also in high demand in America. In such situation, Americans will be the biggest sufferers due to Trump’s recklessness. They will have to pay more than the double for every Chinese smartphone, Laptop or any other goods.
Trump is dreaming about making America, a world’s factory. However, it seems like he is unaware that Americans prefer to rest more than the Chinese. Americans have to be paid more wage on hourly basis. China’s population is 1.4 billion, whereas the population of the United States is around 340 million. In such case, America will need huge workforce to run factory on its land, for which Trump might have to look to other countries.
Split In Trump Administration Over Tariff Policy
The challenges that America is currently facing are due to its own leadership. American capital and companies have played huge role in turning China wealthier and making it economically strong. The way Trump is moving now, he might have to reverse some more decisions of his. For instance, Donald Trump on one hand is strengthening visa policies to restrict the entry of outsiders, crackdown on illegal immigrants and their deportation is continuing at a rapid pace.
In such situation, to increase manufacturing in America, it will be necessity for Trump administration to take a U –turn in Visa policies and rules. Department of Government Efficiency (DOGE) head and Business tycoon Elon Musk, after assuming the charge when asked government employees to account for their work, it caused an uproar. Several employees refused to tell about their work. Moreover, a divide on Tariff policy can also be seen emerging in Trump administration. Even Musk has openly opposed Trump’s Tariff policy.
Allegations Surface Of Trump Benefiting Friends
Not only this, amid the turmoil in US markets, Trump has been accused of benefiting his friends through stock market gains. Democrat MPs have demanded investigation into this, whether Trump, his family or any close member is taking benefits of inside information and benefiting from the stocks in markets. On one hand, he raises tariffs on China to 145 per cent and on the other hand he announces 90-day tariff pause on over 75 countries.
In such situation, question arises that whether Trumps want to create new global economic order, which isolates China. And why will small and big countries accept America’s call. A small country like Singapore’s Prime Minister Lawrence Wong stated that the tariff policy of United States is not an improvement in the global trade system but a rejection of a system, that US had supported once. In light of all these, are we going to witnesses the emergence of a new World Economic Order?
China Wants to Join Hands with India
Donald Trump has claimed that America is earning 2 billion dollar a day through tariffs. Based on this, the total earnings for the year would amount to $730 billion. However, in the pursuit of earning $2 billion a day, how much will the country with a GDP of $30 trillion have to pay in costs? This can only be estimated now. President Trump also might have not thought that China would reply to his tariff tactics like this. China has reiterated that instead of bowing down it will fight till the end. Moreover, China today says that Beijing and Delhi should join hands against America.
Recently, a well-known economist of the US, Professor Jeffrey Sachs had visited India. While speaking at a program of news channel, he stated that America wants to use India against China. However, he advised that India should not get caught up in America’s game. He emphasised that India’s scope is much larger than playing a part in US strategy. We can understand it through this, imports have larger role in the economy of the US. Whereas, China’s economy is running on exports. And amid all this, production and consumption, both have role in India’s economy. In such scenario, India has both opportunities and challenges in Trump’s tariff storm.
Which Path Will India Take?
The biggest question in front of India currently is where to head amid this turmoil in the economic order of the world. Is a new door of opportunity opening for India amid the trade war between China and the US? This can be viewed in two ways; first, due to the tariffs, Chinese goods will cost more in America. This way the competition level for Indian products will be less. But India will have to work more to take place of China in manufacturing. Second, many companies can come to India from China to evade Trump’s tariffs.
Now the question arises that whether foreign companies will get perks like China in India? In past few years, India has advanced towards indigenous (Swadeshi) rapidly. India has mastered on how to balance relationships amid conflict in the world. For instance, India didn’t take any sides in the Ukraine-Russia conflict, and also didn’t hesitated to buy cheap oil from Russia. India is well aware of what President Trump wants and what is there inside the heart of Chinese President Xi Jinping. Both of them are unpredictable. None of them can be trusted with blind eye.
In this situation, Delhi will need to advance its diplomacy with the US and China with caution, while seeking new markets based on domestic needs. The way President Trump is running US, taking decision and reversing it, it has negatively affected the country’s credibility. The value of Trump’s words has reduced. He had tarnished the reputation of American democracy while leaving his first term and now the way he is moving forward, will result in no one taking the world’s largest economic and military superpower seriously. What could be a bigger loss than this for a country like America, known for its liberal democracy?
Also Read: What Kind Of ‘Ram Rajya’ Is Needed Today To Accelerate India’s Economy Amid Global Challenges?
