By Anjan Roy
Never before, an American presidential election evoked such widespread interest and concern across the world. This is because the presumptive president has given rise to fears and concerns about America’s policies which do not promise to follow the scripted lines. There is a sense of uncertainty all the way in the power circles in Beijing to the NATO headquarters in Europe and to the Middle East capitals.
The expectation is that Trump will usher in a new era of gains and losses, devoid of any moral values and permanent friendships or enmities. India should not sleepwalk into a situation believing Trump is friendly to India and Narendra Modi. Instead remain vigilant.
Early reports indicate that India is not taking things for granted. A team from union commerce ministry is reportedly preparing position papers on trade and investment and even thinking of briefing Indian embassy in Washington about the Indian position on the ground.
In his last term, as well as when out of office, Donald Trump had railed against India for using tariffs to presumptively keeping out American products. He had once cited the case of the iconic Harley Davidson motor cycles. Trump had alleged that India had imposed 100% tariff on Harleys which kept the motorbike out of Indian markets.
The fact on the ground was Harley had a plant in India and when it imported its components and parts in knocked down condition, the Indian Harley operations paid a nominal 10% duty. Not briefed, Trump had often described India as the “Tariff King”.
Donald Trump has proposed spikes in its tariff rates against imports in search of what is rather innocent thinking that exclusion of vital imports through imposition of prohibitive levels of tariffs should result in larger American production. The fact is America had long ceased to manufacture of these products and present day rigidities in the American economy would act against their production again.
Trump had promised in his election campaign speeches to levy at least 60% tariffs on Cheese imports. Similar levels of tariffs and non-tariff barriers would be slapped on imports from other countries as well, including presumably those from India and America’s NATO allies in Europe.
Such tariffs would hurt the American consumers and the inflation rate should shoot up. More so, because Trump has also promised large tax cuts within the country, which should jack up demand. He also promises to ensure that American blue collar workers got a better deal and hikes in wages.
Such fiscal stimulus should result in larger demand as more of their incomes would be with the hands of consumers. Coupled with tariffs, which should make imports from overseas limited and costlier, would push up the price line in general. The options should be either to organise alternative supply lines or a significant jump in domestic production.
Rising prices internally should on the other hand push the central banking authority to pursue an anti-inflationary policy. That means the Federal Reserve should increase the policy interest rates. The whole gamut of promises thus result in a big mess..
That should not have bothered people in other counties a bit, while leaving the American consumers to stew in their domestic rut. But the state of the American economy invariably changes the reality for other countries. A turgid American economy can influence its financial markets and financial flows across the world.
The queer economic policies promised and the inevitable result of pursuing these on the ground might just as well make the newly elected president go back on his promises. Then he loses his credibility.
The economic policy prescriptions apart, Donald Trump’s other promises could equally be disruptive. There is a strong feeling that Trump would promptly withdraw support to Ukraine and the Ukrainian resistance should crumble within a short period. A clear and quick collapse leading to Russian victory might bring an end to manslaughter and violence, but it will certainly set a very different kind of precedence affecting relations with Western Europe and NATO.
Such an outcome should embolden China in pursuing its strong arm tactics over a wide area. Risk would be Taiwan and its independence. China would like to bulldoze over Taiwanese resistance and seek to establish its own authority across the Taiwan Straits.
In pursuit of its own aggrandisement, China might choose to do a deal with USA to free itself to follow its own strategy. Since Donald Trump is exactly the man to do deals, he might just as well go along with China in the interest of its promoting its own goals.
India in this instance must remain wary of Trump and his antics. While praising the Indians in the run up to his election, Trump might just as easily forget all that and follow his own MAGA goals. He will as easily dump India for his deals than follow a path of consistency and moral commitment.
For the world, it will be far better to play Trump in his own game. Do deals with him and never expect any permanent commitment from the American president. Never trust Trump, but play along your own game. (IPA Service)
