India Must Insist On Zero-For-Zero Tariff With Trump

“India charges us massive tariffs, you can't even sell anything in India, it's almost restrictive... By the way, they have agreed to cut their tariffs way down now because somebody is finally exposing them for what they have done.”- Donald Trump.

The so-called Sanatanis led by Baba Ramdev had hailed Donald Trump when he began propagating American Nationalism. In fact, the likes of Ramdev praised Trump sky-high and even likened him to a Sanatani. Some gurus had even gone to the extent of performing special pujas and archanaas praying for Trump’s victory and applied tilak on his photographs. And then when Trump won his second term, the BJP propaganda machinery and the Godi media went gaga and celebrated the event as though that was the best event after Modi’s victory of 2014. The entire euphoria suddenly went dead as Trump began to tariff-for-tariff and derided India as the Tariff King. Shocking was the fact that the pro-Modi machinery could not read the writing on the wall. Trump has been giving enough warnings.

I think I was a bit mild when I likened Trump to Gabbar Singh in my last column. Now, pro-Modi Ramdev (has he read my column?) fired the salvo at Trump targeting the US President’s tariff terrorism. He, along with Putin, Xi Ping and Kim, is taking the world in a different direction, Ramdev roared.

Ramdev went to the extent of stating that India must be united and be strong to give a fitting reply to Trumps of the world. Apart from being so authoritarian in his MAGA drive, Trump also does not respect either WEF or WHO and he wants to run the IMF and the World Bank as per his own liking, the Modi-supporter yoga guru said.

As we discussed the last time, India has not uttered even a word against the tariff terrorism. After an all-round criticism of the prolonged silence, someone from the government could have promoted Ramdev to say what he said about Trump’s tariff-for-tariff policy. In short, is Ramdev being used as a test balloon and see how the US reacts.

Trump has been saying repeatedly that the US has been “ripped off by everybody” and that will stop now. “I had it stopped in my first term and we're going to really stop it now because it has been very unfair," he said. But it is also important for India and the world to analyse the impact of Donald playing his tariff trumpet.

As New Delhi based think tank GTRI - Global Trade Research Initiative, a research Group focused on Climate Change, technology and trade- says, the Reciprocal Tariff Plan, announced on February 13 by the Trump administration, allows the US to raise tariffs on countries with a trade surplus.

Indian exports could face an additional tariff of 4.9 per cent, compared to the current 2.8 per cent if the U.S. imposes a uniform tariff,

Indian farm exports would be hit hardest, with shrimp, dairy, and processed foods facing tariffs of up to 38.2 per cent.

Industrial goods face major risks; pharmaceuticals (10.9 per cent tariff), diamonds &jewelry (13.3 per cent), and electronics (7.2 per cent)

Petroleum, minerals, and garments may be unaffected due to existing US tariffs.

India could offer a zero-for-zero strategy to the US, eliminating tariffs on 90 per cent of industrial goods to prevent aggressive tariff hikes, GTRI says.

But while doing this India has to ensure that the US reciprocates with a similar gesture allowing a free trade of goods between the two countries. One cannot take the risk of blindly believing a protectionist that Trump is. Remember, he is also inconsistent.

China, Canada and Mexico have already announced retaliatory measures if the US goes ahead with its threatened policy implementation from April 2. This had the desired impact as Trump put off the tariffs on these countries. There is mention of such a relief to India.

But India now says there is no official communication about the US’ April policy, though Trump himself has announced it to the World. Negotiations are still on with the US, India says. Does this reflect an ostrich-like behaviour or we are being primed towards further reduction of duties on the lines of what the government has done for automobiles and certain liquor brands that are being imported from the US.

From tariff-for-tariff to zero-for-zero would obviously ensure level-playing ground – at least on paper - for the Indian goods that are being exported to the US. This could turn out to be an optical illusion if the industry does not get export support and domestic subsidy. I say this in the context of the US farm products, coming with a massive subsidy backup, that will be dumped on India. Indian food processing will not be able to withstand that pressure. In fact, industry leaders such Amul have already represented to the government warning against the predatory US.

The entry of Elon Musk’s Tesla into India under the tariff terror pressure, could upset the Indian auto sector’s apple cart. Auto giants grudgingly welcomed the competition. But any unfair competition could be detrimental to the domestic industry’s interest. The Indian auto dealer network is quite concerned over the car makers pushing stocks amid market slowdown.

The Federation of Auto Dealers Associations (FADA) has said its members began expressing concerns about inventory being pushed to them without their consent.

“While such initiatives may serve broader business objectives, it is critical to align wholesale allocations with genuine demand to protect dealer viability and ensure healthy inventory management,” said FADA president C S Vigneshwar.

Meanwhile, February witnessed a broad-based downturn across all categories, a trend that was anticipated in our previous survey which projected a ‘Flat to De-growth’ sentiment for the month, Vigneshwar said releasing the monthly sales data.

Let us not forget the fact that the Indian solar power industry was down in the dumps till the government imposed an anti-dumping duty on Chinese products.

It is in this context that we should remember that the Make in India for the world drive could go for a toss under tariff terrorism.

India must quietly work on an America Plus strategy by rejuvenating BRICS. It need not be a dollar plus strategy. Just like America, the world has no choice but to live with Trump for another four years.

(The columnist is a Mumbai-based author and independent media veteran, running websites and a YouTube channel known for his thought-provoking messaging.)