Tariff bloodbath
US President Donald Trump’s tariff onslaught and China’s retaliation have taken their toll on global stocks, igniting fears of a prolonged, full-blown trade war that could hit economic growth worldwide. Shares nosedived as fear and uncertainty triggered massive sell-offs on Monday. Investors felt the heat in India too as they were left poorer by Rs 20 lakh crore in the morning itself as benchmark indices Sensex and Nifty faced a drubbing. The battle lines are set to harden as China has decided to red-flag US reciprocal tariffs as a “new trade concern” at a WTO meeting on April 9. Beijing has signalled its intent to build a broad coalition to jointly oppose unilateralism and protectionism, and safeguard the international trading system.
The million-dollar questions is: Will Trump negotiate or continue with economic bullying? The US President is not one to back off once he has set forth on a course, no matter how perilous or reckless. The onus will be on other nations to fall in line – how long they can hold out will depend on their ability to hit back. Looking at the larger picture of India-US trade ties, Delhi has chosen negotiations over confrontation. However, investors’ growing panic has added to the pressure on India to work out a reasonable deal sooner rather than later.
There is a possibility that Trump may not be able to sustain his blitzkrieg if China and other nations up the ante. Ironically, the US President is creating a situation detrimental to his own country. According to an analysis by The Budget Lab at Yale University, retaliatory tariffs could cost the average American household up to $4,200 annually. The spectre of recession and higher inflation is looming large in the US. Countries like India are hoping that international as well as domestic pressure will make Trump realise his monumental folly and stop him from triggering greater economic chaos.
