Coping With Donald Trump's Tariff Tantrums

US President Donald Trump described his tariff onslaught on the world on April 2 as “Liberation Day” for America. The impacts of these tariffs are being analysed in capitals across the world. The scale and universal nature of the tariffs are hugely disruptive, but the uncertainty they have spawned is making any rational economic and business decision-making virtually impossible.

Trump says that these tariffs are a revenue-raising instrument which will allow significant tax cuts. But then how can this be squared with the other stated objective of using tariffs to compel trading partners to reduce their tariffs on US exports and accord it greater market access? If negotiations with trading partners result in tariffs being lowered, then what will happen to the revenue they were supposed to raise? The third objective to re-industrialise the US behind high tariff walls would require tariffs to remain high and at a predictable level for several years to persuade investors to set up industries in the US.

If tariffs can be adjusted up or down to serve other objectives, then why should any investor take the risk of investing in the US for the longer term? These kinds of contradictions and policy incoherence are resulting in uncertainty, which will lead to a slowdown in the global economy, perhaps even a recession, as countries and businesses assess the consequences and reposition themselves in an altered economic space. This process will inevitably lead to a reshuffling of geopolitical equations. There will be winners and losers, and power equations will change.

The “tariff tantrum”, as the onslaught has been described, takes place in the larger context of ideological and political changes which Trump has already made. These include a wholesale rejection of constitutional constraints on the Executive, an increasingly discretionary and even whimsical style of governance and a systematic and deliberate hollowing out of the institutional edifice of the federal government. These developments will inevitably affect the credibility of the US and the trust in its adherence to commitments—past and present. Even if, for example, trading partners make concessions to obtain remissions in tariffs imposed on them, they could never be certain that any agreement would hold.

After all, the US-Canada and Mexico free-trade agreement, which Trump had himself re-negotiated during his first term, has become a dispensable scrap of paper. The biggest casualty for the US in its external relations is the loss of credibility. The US is the world라이브 바카라 largest economy and a military superpower. But it is no longer the indispensable power it once was. The rest of the world may well unlatch itself from an unreliable America and move on.

What are the key geopolitical changes likely to emerge from the current chaos?

One, for the first time since the end of the Second World War in 1945, there is no longer a “West”. Trump has destroyed the ideological affinity, “shared values” and even the shared security perspective, which constituted a powerful and influential trans-Atlantic zone. The US, for the past two decades, has been shifting its strategic focus away from the trans-Atlantic to the Indo-Pacific as its contestation with a rising China becomes more salient and urgent. That shift continues and Europe must fend for itself. How Europe responds to this existential challenge will have a major influence on the shape of the emerging global order.

Two, Trump has handed a strategic win to China. It will be recalled that in March 2023, during a visit to Moscow, China라이브 바카라 President Xi Jinping was recorded on TV cameras, conveying to his host, the Russian President Vladimir Putin, that: “Right now, there are changes—the likes of which we haven’t seen for 100 years—and we are the ones driving these changes together.” Putin said, “I agree.”

In retrospect, this exchange between the two leaders appears remarkably prescient. Trump has created a gaping hole in an erstwhile geopolitical space dominated by the US. China is the only power which has the overall economic, military and technological capabilities to strive to occupy this space, at least in Asia, if not the world. For example, the gutting of USAID and the drawing down of support to UN agencies that deliver much-needed emergency assistance and developmental support, will give China an opportunity to expand its already considerable influence in the Global South. If it is careful not to lapse into its “Wolf Warrior” mode of engaging with the world, which caused much diplomatic damage to its external relations, China will be a net geopolitical beneficiary. Its prompt retaliation to the fresh round of tariffs imposed on it by Trump points to its self-assurance. It reflects the reality that even though the US is still the world라이브 바카라 largest economy, its share of global trade is now 12.5 per cent and it is the third-largest trading nation in the world. China is the largest trading nation in the world with 15.2 per cent of global trade. It will have more bargaining heft negotiating with the US compared to Trump라이브 바카라 first term.

There is a view, put forward by analysts like Richard Kaplan, the author of a new book, The Waste Land: A World in Permanent Crisis, that all three major powers—the US, Russia and China—are in decline. On China, he posits the argument that China has now entered a period of demographic decline, that its very success in creating a middle class makes it increasingly difficult to maintain a highly repressive and authoritarian government and that it will soon reach the secular rate of growth displayed by most mature economies historically, of about 2-3 per cent per annum.

Even if this is plausible, the relative position of the three major powers favours China for the present. The Chinese leadership recognises these retarding factors in its economic outlook for the future. But to the extent that technology has become the most important driver of growth, China has been investing heavily and sustainably in advanced technology including Artificial Intelligence and Quantum Computing. While other advanced nations are giving up on climate change-related goals, China is forging ahead with clean-tech investments.

Three, we are witnessing the erosion and enfeeblement of the liberal democratic state, which may be difficult to revive in the foreseeable future. We are a far cry from The End of History and the Last Man declared by Francis Fukuyama in 1992 after the collapse of the Soviet Union, and the wave of new democratic states emerging in its wake not only in Eastern Europe, but also in other parts of the world.

Fukuyama argued that liberal democracy and capitalist market economics had finally emerged as the unrivalled political and ideological systems. There could be no rival in the future. And yet history came back with a bang at the turn of the millennium. The War on Terror launched after the September 11, 2001, Al-Qaeda terrorist attack on the iconic Twin Towers in New York led to unprecedented restrictions on personal liberty and fundamental rights in the name of security in the US and in other democratic countries.

There were other shocks that followed—the global financial and economic crisis of 2008-09, the economic recession in 2015-16 and the COVID pandemic of 2020-23, which brought lower incomes, higher unemployment and elevated state and personal indebtedness across the world. The role of the state in the lives of the people increased significantly, while declining economic prospects triggered widespread resentment and anger towards the governing elite. At the same time, technological advances reinforced globalisation, but its rewards were cornered mostly by a global, cosmopolitan elite, which became increasingly disconnected with the populations left behind in their own countries.

Globalisation by itself is a positive trend as it creates more wealth, but it is the skewed distribution and the rising income and wealth inequalities left in its wake that have given it a bad name and led to the rise of populism and narrow nationalism in country after country. This is not the inescapable consequence of globalisation, but a failure of public policy. The political leadership in several countries has either been co-opted by the wealthy class or there has been a failure of the liberal Left to give voice to those left behind by the wave of globalisation. Liberalism itself has become a term of political abuse instead of inspiring the ideals of equality, liberty and fraternity among citizens of a country as it once did.

In the post-Second World War era, the US served as a sentinel of liberal democracy, even though its own conduct was often driven by contrary impulses. We are now seeing its evisceration in the US itself and this cannot but have consequences across the world. We are likely to see an even greater lurch to the Right globally. The age of democratic regression is upon us; and,

Four, precisely at a time when most of the challenges humanity faces are cross-national and cross-domain in character, which demand global and collaborative responses, we are moving in the reverse direction. Multilateralism cannot work without some sense of international solidarity and a commitment to common humanity. If every country is for itself, if each wants to make itself great again, then we shall end up in a fractured, contested and angry world. The danger of war is greater today than at any time in recent history.

Where should India locate itself in this geopolitical churn? China will impinge much more on our security interests than ever before. We will need new coping strategies. The likelihood of a change in US strategy towards the Indo-Pacific should be carefully watched. There has been an assumption in India that the US is committed to upholding its predominance in the Indo-Pacific. The Quadrilateral라이브 바카라 relevance and efficacy is anchored on this assumption. This could change under Trump. He could do a deal with China which acknowledges the latter라이브 바카라 pre-eminence in the region, with the US retaining a force posture which gives it the role of an offshore balancer. If the US withdraws its commitment to respond militarily to a Chinese invasion and occupation of Taiwan, then the Quad will no longer be relevant. China does not have to invade Taiwan. It can and has been adopting salami-slicing tactics to systematically reduce Taiwan라이브 바카라 room for manoeuvre to such an extent that formal acceptance of Chinese sovereignty, with limited autonomy, may appear the only practical option for the island.

India should keep its head down and work to minimise the inevitable damage its interests will suffer under Trump라이브 바카라 America. There may be opportunities to expand cooperation in defence and high-tech sectors which are of advantage to India. It was prudent to refrain from retaliating against the US imposition of 27 per cent tariffs on Indian exports. These will hurt, but at a macro-level not much as India라이브 바카라 GDP is less trade dependent than other countries.

In parallel to these tactical moves, India needs to diversify its external economic relations. Asia is now the crucible of the global economy and its most dynamic component. India must reverse its relative marginalisation in the regional economy. One should re-consider the earlier decision to stay outside the Regional Comprehensive Economic Partnership (RCEP) and be bold and apply for membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It may also be worthwhile to revive India라이브 바카라 application to join the Asia Pacific Economic Conference (APEC), which is not a trading arrangement, but a promotional and norm-setting organisation with membership across the Indian and Pacific Ocean littoral. Economic diversification also demands the early conclusion of ongoing free-trade agreements with the European Union and the UK. And finally, India should take the lead in promoting economic integration in its own South Asia neighbourhood. Its very asymmetry of power vis-à-vis its neighbours, economic and military, enables it to become the engine of growth for the region and its main security provider. This would also make the country less vulnerable to security threats arising due to internal political developments in the region or because of interventions by external powers, especially China.

On balance, India is well-placed to deal with the risks inherent in a transforming geopolitical landscape and position itself as a major player with enhanced strategic autonomy. It enjoys political stability. It has a decisive leadership. Its economy is registering steady and relatively high growth and it is blessed with an enormously talented and highly educated pool of professionals. A powerful India carries the assurance of a multipolar world anchored in a multipolar Asia. This will be welcome in a world anxious about China and looking for some stable anchor.

(Views expressed are personal)

Shyam Saran is a former foreign secretary

This article is part of 바카라라이브 바카라 April 21, 2025 issue 'Adolescence' which looks at the forces shaping teenage boys today—online misogyny, incel forums, bullying, and the chaos of the manosphere. It appeared in print as 'Eastward Ho'.