Life after Tariff Blitz

The announcement of massive recip­rocal tariffs on countries across the world by US President Donald Trump on April 3 morning has pushed the world into an uncharted realm. This single step will en­sure that global trade will be hit exceptionally hard. This is the death knell of globalisa­tion as known until now.

Three features of the latest Trump tariffs are worth not­ing. First is their sheer scale that ranges from a baseline 10 per cent to nearly 50 per cent. No trading country has been spared and the list of tariffs extends in a mindless fashion to even places like Svalbard and Jan Mayen (under Nor­wegian control) to British In­dian Ocean Territory (Diego Garcia). Second, exporting powerhouses like Vietnam and China have been hit particularly hard. Vietnam faces 46 per cent tariffs and China 34 per cent (in addition to the 20 per cent imposed earlier, bringing them up to 54 per cent on April 3). Asian countries have been particu­larly hit hard. Three, with these tariffs, the effective US tariffs have inched up to 22.5 per cent, the highest in that country since 1909. It will no longer be the “buyer of last resort” propping up the global economy.

At this stage, it is hard to predict the consequences let alone calculate them. But their outcome is certain: it will be very destructive. For example, with 54 per cent tar­iffs, it will become impossible for China to sell its products in the US market. That is un­less it devalues its currency or marks down their prices dras­tically. Any devaluation will only invite a further round of tariffs and counter-devalua­tions. This will only lead to a generalised trade war among all countries. This is no longer a far-fetched scenario.

In the 80 years since the end of World War II, global trade has been painstak­ingly built up piece by piece. But over time, the imbal­ances that had crept into the system—especially after 1990—had proved irremedi­able, leading to a stage where mercantilist thinking gained ground. The Trump tariffs, for example, are not based on tariffs imposed by other countries on US exports but are, in effect, on US’ trade deficits with individual countries. But even here, Trump has been “strategic”: a large number of countries from where the US imports essential items, such as minerals and other items, have been spared the worst tariffs. This is over and above tariff exemptions for items such as pharmaceuticals and semiconductors.

Global trade will suffer not from higher tariffs alone. Because these tariffs are driven by the US’ trade deficit, it will make investors wary of investing in any country for the fear that any trade surplus will invite Trump’s wrath. Vietnam is a good example of this fate. It emerged as a trad­ing powerhouse as countries began to diversify away from China as the latter began to be seen as an “unfair trading partner” as it notched up huge trade surpluses. Now Vietnam is in trouble merely because it has a large trade sur­plus. If this trend continues, no country will be immune and an investment collapse, or at least a major reduction in investment, is likely.

India has been slapped with a 26 per cent recip­rocal tariff, a rate that is comparatively less than what other countries are facing. Bangladesh has been whipped with 37 per cent tariffs and Sri Lanka with 44 per cent. India’s IT services and pharmaceutical exports will not be affected even as its automobile and auto compo­nents exports will be hit hard. India is already negotiating a bilateral trade agreement with the US. This is a time for India to explore individual, country-to-country deals. This is no longer the era of generalised open trade in which everyone gained. The cost of individual deals will, of course, be higher even as there will be other costs as well. But this is not the time to mourn for global trade but a time to creatively explore deals that can be secured.

The Red Herring

A letter purportedly written by the Communist Party of India (Maoist) that surfaced on March 28 calls for peace talks on condition of a halt in anti-Maoist operations and a pause in setting up armed camps—a key contributor to successes in the government’s offensive against leftwing extremism. Chhattisgarh Deputy Chief Minister Vijay Sharma, who holds the home portfolio, dismissed the “offer” as untenable due to the condi­tions attached. Apart from verifying the authenticity of the press re­lease, the plea to send security forces to the barracks will not cut ice. The letter, released ahead of Home Minister Amit Shah’s visit to the state, is unlikely to impress the leader. As Sharma put it, neither the Centre nor the state was keen on firing a single bullet, but Maoists must designate negotiators for any peace talks with no conditionali­ties. He might also add that only unconditional surrender of arms will suffice. The terms of any settle­ment could include rehabilitation and other guarantees but cessation of violence is non-negotiable. In the past, Maoists have typically used ‘peace talks’ to recoup and rearm. In 2004, the Congress government led by YS Rajashekhar Reddy cut a sorry figure when it opened negotiations with Maoist, apparently in return to covert support in elections that unseated the Telugu Desam Party (TDP) in undivided Andhra Pradesh. The talks, initially marked by haggling over whether Maoist leaders could carry their weapons, failed ignominiously. This time, Maoists find themselves under severe pressure from unrelenting security operations that have taken a heavy toll of dozens of leaders and hundreds of foot soldiers. The number of districts most affected by Maoist violence has shrunk from 12 to six, according to the home ministry. The exclusion of Dantewada from the list of most-affected districts is significant. The southern swathe of the dis­trict remains, by most accounts, vulnerable to Maoist violence. But the steady push of security forces into more remote areas has expanded the footprint of the state. On the one hand, a career in Maoist ranks has become riski­er. This is the time to continue resolute action. (By Rajeev Deshpande)

The Big Picture

Mandalay, March 30, 2025
Mourning in Myanmar
The destroyed Mahamuni Buddha Temple, a historic pagoda, after an earthquake measuring 7.7 in magnitude with its epicentre near Mandalay devastated Myanmar on March 28. Strong tremors were felt as far as Bangkok in Thailand and more than 3,000 people had died at the last count.

Newsmaker: In Memoriam: Val Kilmer (1959-2025)

Mad about Method
Once a leading man, the actor brought an eccentric sensibility to his performances

SHOWBIZ CAN sometimes be a strange business. Some careers take off, and some, despite seemingly having everything going for them, careen off. Val Kilmer, the actor who died at the age of 65, fell in the latter career. Kilmer was the ideal movie star. He was good looking and had a great screen presence, and he could put in tremendous performances, especially when the right roles came along. And early in his career, he seemed poised to break into the league of stars like Tom Cruise, Brad Pitt or George Clooney. But that never happened.

He appeared to have a real shot at that stardom around the early and mid-’90s, when he acted in a string of high-profile films, from the role of Jim Morrison in Oliver Stone’s The Doors, that of the tubercular gunslinger Doc Holliday in George P Cosmatos’ Western Tombstone, the caped crusader in Joel Schumacher’s Batman Forever, to the role of a crew member working for Robert De Niro in Michael Mann’s Heat. But for some reason either the film did not work as expected, or it couldn’t carry Kilmer into the next league of stardom. But whatever the quality of the film, Kilmer was always enchanting to watch, bringing a distinctive sensibility, a kind of eccentricity to each role. Kilmer was a more fascinating actor than he was a star. And he would lavish that eccentricity again and again in many of his roles. He may not have become the heartthrob many thought he would be. But he became a far more interesting actor with an eclectic body of work.

Noisemaker: Asaduddin Owaisi
Defender of the Indefensible

Tearing up a Bill in Parliament is no longer as shocking as it used to be. All India Majlis-e- Ittehadul Muslimeen leader Asaduddin Owaisi’s action of ripping up a copy of the Waqf (Amendment) Bill in Lok Sabha smacks of political grandstanding rather than sincere intent. His claim that the Bill is unconstitutional is at odds with what he must know as a lawyer called to the bar at Lincoln’s Inn in London. Parliament is fully within its rights to legislate on charitable institutions and trusts like the Waqf. He would also know the extent to which the Waqf boards have been manipulated to facilitate illegal land transfers and grabs. His claim to draw a leaf from Mahatma Gandhi is even more ludicrous and a poorly judged attempt to defend his actions.

Ideas
Disclosure

The judges of the Supreme Court have decided that they would, all 33 of them, publish their list of assets in the court website. This is a consequence of the stack of cash found in the house of a Delhi High Court judge, which has led to a major controversy for the judiciary. Such disclosures are good for not just judges but all public functionaries because power always comes with the possibility of corruption. Disclosing assets has been mandatory for politicians standing for elections for some time now. They have to file an affidavit listing their wealth as well as criminal cases filed against them. The public might still vote for them but at least they do so with their eyes open. That the Supreme Court, which has given numerous rulings in favour of transparency, should have taken so long to institute such a measure is surprising. Earlier, the judges who disclosed assets only did so by volition but that is not enough. Disclosures are effective when transparency is stretched to its limit. Even now, what about public disclosure of assets of judges of the lower courts? Especially given that corruption is thought to be most rampant there. Should it not be mandatory as a policy? Just making the disclosure can also be a toothless instrument without specifying the repercussions for those who file misleading information. Public awareness about how much a judge owns year on year is a strong disincentive for corruption. It also increases trust among those whom judges have to adjudicate over.

Money Mantra
Axe That Tax
The impact of reciprocal US tariffs on India

THE IMPOSITION OF new reciprocal tariffs by the US presents both challenges and opportunities for India. While certain export sectors may face disruptions, India’s diverse economic structure, strong domestic market, and stra­tegic global partnerships position it well to mitigate the adverse effects of the tariffs and explore new avenues for growth.

In the immediate term, industries heavily reliant on exports to the US may experience setbacks. Tariffs could lead to diminished demand from American importers, resulting in lower revenues for Indian manufacturers in sectors like gems and jewellery. A sudden increase in tariff-related costs may force them to either absorb losses or pass costs onto consumers, which could impact overall demand.

On the other hand, certain industries may be less affected by the tariffs. India’s technology and pharmaceutical sectors are crucial to the US economy. The dependence of American firms on Indian IT services, software solutions, and generic medicines means that imposing tariffs on these sectors would be counterproductive for US businesses and consumers.

Thus, while other industries face headwinds, high-value sectors are likely to maintain stability.

Also, in many sectors, where Indian exporters are competing with China or other countries, the imposition of reciprocal tariff is higher in case of other countries and hence the fear of losing market share is very low.

Instead of being a setback, in the longer term, these tariffs may serve as a catalyst for India to strengthen its self-reliance, expand into new markets, and solidify its position in the global trade ecosystem.

That said, this is probably the beginning of a prolonged trade and tariff war, so one should be watchful. (By Siddharth Singh)

Viral
The Internet Gets Ghibli-Fied

It was not long after OpenAI’s ChatGPT introduced its upgraded AI image-generation tool that the internet got swamped by images produced in the style of Studio Ghibli. Today it is everywhere online. Such has been the obsession that OpenAI’s Sam Altman has even complained about the strain on his firm’s servers and brought in restrictions on the number of times users can use the feature. With this viral trend has also come criticism over the ethical and copyright issues surrounding the replication of a particular artist or studio’s style. An artistic style usually does not get safeguarded under copyright laws. So, OpenAI is probably legally clear. Many fans of the studio have claimed this trend cheapens the studio’s work. Neither Hayao Miyazaki, the studio’s co-founder, nor the studio has commented on this trend. For all one knows, they are probably not unhappy about the increased attention such a trend will bring to their work.

 

Asaduddin OwaisiChhattisgarhDonald TrumpgeopoliticsMaoistsUS tariffsVal Kilmer