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The Make America Great Again (Maga) Agenda is in full swing. Shortly after the leadership, US President Donald Trump announced Extra rates About the three largest trading partners in the United States: Mexico, Canada and China. Although have rates on Mexico and Canada There are pausedThose of Chinese import have come in force.
China responded With counter-tariffs about the import of the US.
Such measures could disrupt global growth and disrupt critical sectors such as retail, technology and production that are highly dependent on global supply chain and imported inputs.
For India, these targeted rates and threatening Protectionist policy will create complex challenges and opportunities. Trump’s renewed emphasis on disconnecting China can, for example, serve as an opportunity. Three recent developments suggest that India may be the beneficiary of the pushback on China.
At the first Quad ministerial Meeting After Trump took the lead, the United States, Australia, India and Japan spent a United warning against coercion actions to change the status quo in the Indo-Pacific. This is a clear but indirect message to China about his assertive maritime activities. All four countries of the Quad -Share are concerned about the growing influence of China in the region.
Second, under Trump 2.0, the “China Plus one“Strategy will probably get a big push across the board. This strategy includes diversification of the production basis and investment activities of multinational companies Hedge against risks In China. American companies are increasingly shifting their production basis to Alternative markets such as India and Vietnam To reduce dependence on China and to stimulate stability.
Here India can position itself as a feasible alternative to attract foreign direct investments and to take advantage of trade disposal. Companies such as Apple Inc. have already started Expansion of activities In India – Beyond Assembly and Sales – which indicates the growing potential of the country to play a central role in the rearrangement of global trade.
Shortly after the fourth ministerial meeting, Marco Rubio, the new State Secretary for the US State, held his First bilateral meeting with S. Jaishankar, the Minister of Foreign Affairs of India. Discussions were aimed at regional challenges and opportunities for cooperation in critical and emerging technologies, defense, energy and promoting a free and open Indo-Pacific.
Despite this healthy diplomatic interview with the Trump 2.0 administration, India must strategically navigate through the turbulent trading waters that lie in front of us.
Rates
The United States is already lifting high rates About important raw materials such as grains and processed foods (193 percent), dairy products (188 percent), oil -containing seeds and oils (164 percent). Over time, the nuclear export sectors of India, such as medicines, textiles, and it will probably also be confronted with higher rates. Such retaliation measures take care About the future of this powerhouse sectors on the American market.
Higher rates can seriously influence the economy. If the US escalates the average Rate rate up to 20 percent About Indian export and India revenge through Increasing its average rates in proportion, it would cause different consequences, such as low competitiveness, economic uncertainty, job losses, trade balance and a decrease in investments. Instead of having a counterproductive rate war, the power of India lies in the use of the friendly relationship between Prime Minister Narendra Modi and Trump for mutually affordable rate reductions.
The Jaishankar-Rubio-Meeting indicates a positive momentum in this respect. Moreover, in its last budget, the Indian government has that too Lowering rates About some import from the United States.
A feasible strategy for tackling Handelson balance would stimulate domestic consumption Through tax cuts. This would increase consumption and generate income in the local economy, which reduces the trade flow and the need for rate is reduced.
Eastwards ho
With the rising tide of protectionist policy under Trump 2.0, India may also have to strengthen its “Look East” strategies.
Rubio has insisted on one pragmatic and realistic American approach to the Association of Southeast Asian (Asean) countries. The ongoing trade deficit of India with China and the Asean countries is due to the large number of imports for production.
For example, India has a flourishing ecosystem for smartphones, but it is highly dependent on imported inputs. China supplies important components such as batteries, displays and chipsets. Vietnam, Malaysia and Thailand complement this by supplying supporting electronic components. The final meeting takes place in India, where companies such as Foxconn and Samsung produce smartphones for both domestic and export sales. To get a lead in the supply chain, India must focus on restructuring the industrial and commercial policy To stimulate exports in sectors with high potential.
Another challenge will be the limitations on the Movement of skilled and unskilled work And Immigration controls under Trump 2.0. These will create a formidable challenge for the IT and outsourcing sectors of India, which are highly dependent on the American market.
However, there is some comfort here. The demand gap of the question for voice (science, technology, engineering, management) professionals in the US and the high costs of hiring local talent suggests that the IT sector of India can retain the relevance, at least in the short term. In the long term, India could diversify its outsourcing activities and explore new markets.
India’s involvement in the Indo-Pacific Economic framework for prosperity (IPEF) offers a different Avenue for growthFocused on the four pillars of trade, supply chain, honest economy and clean economy. India will play a crucial role here, free up the road for stronger strategic and economic ties Within the region.
With its focus ‘America First’ Focus, as the United States withdraws from the consortium, India could benefit from the growth-leading growth by the Blok that propagates. An exit in the US can intensify trade flows in the block, which promotes faster growth because the Member States benefit from existing supply chains and infrastructure connections.
Our analysis, using a International trade database, Show that deeper liberalization in the block could increase trade for India from 3.55 percent to 4.19 percent.
Drill, baby, drill
Climate goals remain offside in Trump’s agenda as his second term Shifts the focus Back to fossil fuels. The United States will withdraw from the Parisian Climate AgreementTurning climate instructions and promoting the development of fossil fuels. However, large oil companies have said that this step can hinder them Transition to cleaner energy sources.
In the short term, this policy can stimulate domestic oil production in the US and possibly lower oil prices. However, it will have a negative influence on the oil and gas industry, which prefers to maintain high prices.
For India, this policy can prove to be a double -edged sword. Increased oil production in the United States will help reduce His dependence on Russia. But it can also intensify the competition for its energy export to Europe.
In the midst of these shifts, India must give priority to climate -friendly technologies and projects. Strengthening cooperation with Japan and Australia under the beautiful Economy pillar of the IPEF will be crucial for promoting goods and services of zero mission.
Finally, the withdrawal of the United States from the World Health Organization and probably withdrawal from IPEF signal A refuge From both multilateralism and regionalism. However, the existing deep economic interdependencies will probably limit the degree of real redeers in global trade, what a Mixed bag with opportunities And challenges for India.
Originally published under Creative commons Through 360Info™.