India’s policymakers should develop strategies to address new trade barriers. Instead, they seem to look forward to it with confidence, even optimistic circumstances. In other countries of U.S. President Donald Trump, there is no attention or anger.
Indeed, if someone nourishes a vague hope that Trump will not impose tariffs on Indian exports, the man himself slammed them last week. In an interview with Breitbart News, the U.S. president said he would impose responsibilities on goods entering the U.S. from April 2, adding that India is “one of the highest tariff countries in the world.”
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Trump’s new trade deal to be signed in the fall during Narendra Modi’s recent visit to Washington may be comforted by the Indian government’s recent promise of Trump’s recent visit to Washington. Of course, the White House may start using new U.S. taxes as a stimulus for India’s famous refractory negotiator from April. Trump said he believes New Delhi will “significantly” reduce tariffs due to his actions.
It seems that the Indians did not recognize that the duties imposed by the United States could harm their exporters. Of course, some businesses (especially those who have expanded goods in the U.S. market in recent years) are far from happy. But especially in recent weeks, as Trump’s level of determination to global trade sinks, leaders are beginning to think that its exporters may have fighter jets in this new era.
But what most outsiders think is optimistic is actually the opposite: a deep pessimism that India’s manufacturing industry will never be effective and efficient, and cannot compete in its own sense.
Officials in New Delhi are actually very open to this. Like the U.S. presidents, they accuse previous administrations of signing trade agreements, they insisted that it led to deindustrialization and nostalgia for the world where bureaucracy rather than bottom lines determines the flow of trade.
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It’s bad enough for Indian producers to lose to China. However, the fact is that after a free trade agreement came into effect, the country’s trade deficit with Southeast Asia widened after a free trade agreement came into effect. They now firmly believe that Indian manufacturing may never be able to produce items cheaper or consistently than their peers.
A country that thinks it cannot win with cost or quality will naturally welcome the third axis.
Having other emerging economies worry about tariffs and restrictions will put them in disadvantages to Western domestic producers. The Indians could hope that this extra factor was the equalizer of their producers compared to the rest of the emerging world.
After all, India has privileges that others don’t have and are not afraid to use them. Its economic scale and policy reliability. This is a state of swing in geopolitical and geoeconomics. All of this adds to any trade negotiations it enters.
Many Indians are in the business community in Mumbai and in the corridor of power in New Delhi, and they all believe that if we play cards in bilateral negotiations with bilateral negotiations seeking our favor, we can win better deals, rather than anything the multilateral trading system gives us. Our negotiators will win what we lost on the factory floor.
So it doesn’t matter if Trump is stronger for everyone else, if Trump raises tariffs on India. Any fear will be felt by those currently exporting from India to the United States. Ultimately, India’s global reputation will give exporters a competitive advantage they will never win.
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I don’t know if this attitude will survive this year. After all, India is another special way: its domestic market has potential. We don’t know if Trump cares about US companies’ market visits in Thailand or Bangladesh. But there is a lot of evidence that he wants them to be competitive in India.
India’s trade is not better than its peers, but rather finds itself at a unique disadvantage due to the super high barriers required by leaders who overestimate India’s producer efficiency and competitiveness.
Export pessimism is a disease in India. This has become so popular that we appear optimistic in the face of trade disruptions. In this new era, just like the last era, Indians will eventually learn the same lesson: Your leaders can’t provide you with some kind of shortcut to competitive success. You still have to produce cheaper, better to win. ©Bloomberg
