With U.S. President Donald Trump, you can never explain it. The narrative of “reciprocal tariffs” is a sudden, stunning turn: there will be a 90-day “pause” or probation for the so-called reciprocal tariffs in most countries. Many countries have contacted the United States to ease trade barriers through consultation. However, the Trump administration imposed a larger tax on Chinese imports, at 125% than the previously announced 104% levy rate.
As there is now a 90-day pause in effect, all countries outside China, the world’s second largest economy, have suffered a 10% benchmark tariff as of April 9, 2025. During this pause, India’s tariff rate was 10%, rather than the previously set reciprocity rate of 27%, which is now delayed.
Mr. Trump’s 90-day tariff pause has brought huge relief to investors. Stock markets rebounded around the world. But worry. There may be another dramatic twist when you read this column. The only certainty – uncertainty, a new norm in the evolving global order. In the future shock, it is necessary to provide safety nets and “Plan B” for vulnerable groups.
Through tariff turmoil, India has taken a low-key approach. Unlike China, India has not retaliated against Mr. Trump’s tariff agenda, which has sparked global markets. Like many other countries, India has ruled out anti-election campaigns and has bet on the positive outcomes of ongoing talks to the trade agreement with the United States. India is also actively seeking to diversify its trade relations and interact with other global players such as the EU, Japan and ASEAN countries to help reduce the vulnerability of tariff wars and trade disruptions.
There is a lot of speculation about the possibility of a rapidly escalating trade war between the United States and China. It can be said that India can benefit from the U.S.-China tariff escalation by attracting companies that want to diversify their supply chains from China.
However, re-wiring the global supply chain is not easy.
Business communities around the world are like predictability; multinational corporations are likely to adopt the waiting and viewing method until there is
It is clearer about the new trade pattern. The uncertainty of long-term global economic stability and supply chain uncertainty continues.
In this era of extreme uncertainty, it is important to develop a plan to prevent our vulnerability and to ensure that the long-term development of the country is not affected. We don’t know what will happen after the pause in the next few days or 90 days.
Which sectors and which businesses in India may also be affected.
As we navigate through rough waters, some of us will have greater risks than others. Millions of Indians are part of the informal economy and are vulnerable. Those without the bottom of a strong support system face greater risks of geopolitical tensions and global instability. Critical policy priorities should ensure that vulnerable populations are protected through social welfare programs facing global market uncertainty.
India’s health, education and skills sectors are crucial to the long-term development and economic growth of the country. These sectors can be significantly affected by global trade dynamics and instability. If India faces reduced economic growth or less foreign investment, progress in the social sector may be reduced unless the government reconnects resources or adjusts its policies to ensure continued funding for these areas.
Whatever the future is, India cannot bear the critical task of strengthening the foundation. If our population continues to lag behind in education, health and skills, we cannot compete with other countries in the global turmoil.
Hours before President Trump’s amazing turntable for tariffs, I spoke with two Indian economists about the country’s most vulnerable safety net amidst sharp global fluctuations. At that time, no one had any comments on Mr. Trump’s so-called 90-day pause in reciprocity tariffs.
Indeed, it appears that almost no country can escape the impact of Mr. Trump’s tariffs until the temporary probation is announced, although the extent of its impact on the country will vary.
It seems that countries will strike directly and indirectly. The latter will occur if the economy of their other major trading partners is also adversely affected. That would mean fewer purchases. There are concerns that in countries like India with an informal sector, many may see lower incomes if India’s GDP growth takes a hit. Furthermore, if the government continues to maintain the same social spending in GDP, the growth rate of social sector spending will drop if GDP growth takes a hit, which in turn can further increase the squeeze of income, as Zico Dasgupta of Zico Dasgupta (teaching economics at Azim Premji Noverity), he said.
We don’t know what will happen after a 90-day pause. Therefore, we must consider a range of possible situations.
“In the scenario of a possible slowdown, and if the government does want to compensate vulnerable populations through fiscal channels, it would require increasing expenditures which would require some change in the fiscal policy goals — that can either involve rethinking fiscal policy rules itself or temporarily deviating from fiscal policy targets. At this point, I do not see any discussion on changing fiscal policy goals,” Dr Dasgupta told me.
Before announcing a 90-day pause, people were very anxious about the impact of Trump-era tariffs on the Indian labor force, such as textiles, leather, gems and jewelry, and handicrafts. Among many unknowns, what happens to these departments after 90 days.
If the United States chooses to impose higher tariffs on these goods after 90 days, for whatever reason, it will have a strong impact.
The most important thing is: the temporary optimism we witness can disappear as quickly as an attack. Many sectors in India are dominated by small and medium-sized enterprises (small and medium-sized enterprises) that have very thin profits and may not be able to withstand the additional cost pressure.
“Strategic planning can relieve the pain of India’s labor-intensive economy”, as economist Avinash Mani Tripathi, professor at Bhopal Campus at Azim Premji University, told me. To buffer any potential blow in the future, India must take preemptive steps. “Targeted government support – more readily credit and income support for small and medium-sized businesses that may be unemployed – can help vulnerable businesses survive the storm in the medium term. In the medium term, diversifying export markets to Europe, the Middle East and Southeast Asia can reduce over-reliance on the United States,” said Dr. Tripathi.
Like natural disasters, it is wise to have proper plans to cushion future shocks.
