Former RBI governor Raghuram Rajan criticized the Trump administration’s decision to impose reciprocal tariffs in approximately 60 countries, describing it as an “autonomous wound.” He said that while the movement would mainly harm the US economy, its impact on India would be limited.

United States President Donald Trump on Thursday announced new duties of advertising value ranging from 10% to 50% in imports from all business members. The initial rate of 10% will be fixed on April 5, followed by a 27% of April 9. Some sectors, such as pharmaceuticals, semiconductors and energy products, have been granted exemptions.

Rajan emphasized that the immediate consequence of these rates would be detrimental to the US economy, calling it a self-taught play. He also noted that the rates would entail higher prices for North -American consumers, reducing their demand and finally affecting Indian growth.

Rajan, in an interview with the PTI news agency, “ we acknowledge that, in the short term, this will negatively affect the American economy in the first place, it is a self-control as footballers would say.The effect on other countries would say, the direct effect of any tariff on India exports will be to increase prices for American consumers, reduce demand and thus Indian growth. ”

According to Rajan, it is expected that the rates will increase the prices of North -American consumers, which in turn could decrease their demand and possibly slow down the exports of India. However, since the United States has also imposed rates on other countries, the impact on India may not be so serious.

He explained that the global effect of rates in India may not be as significant as if they were only aimed at India, as American consumers may not be able to go to non-fare producers if they also compete with producers from other countries.

“Of course, insofar as the United States has also applied rates to other countries and India competes with producers in these countries, the global effect will be less than if the rates have been applied only to India, as American consumers will not be able to replace non-tariff producers,” said Eminent economist.

Rajan explained Trump’s ultimate goal is to increase domestic production in the United States. However, although this initiative is successful, it will probably require considerable time to materialize.

In the meantime, the decrease in India exports could lead to a surplus of goods within the national market, which can result in a decrease in rates. In addition, countries like China can try to increase exports to India due to limitations in access to the United States market.

Advantage of India?

When asked if India can take advantage of the current crisis, Rajan highlighted the potential benefits of reducing the rates, regardless of the impact on negotiations with the United States.

He emphasized the importance of adapting to a more protectionist world commercial environment and suggested to explore trade opportunities with regions such as Asean, Japan, Africa and Europe. Rajan also emphasized the need to strengthen relations within the SAARC and overcome political differences to ensure that South Asia remains relevant in a world of regional negotiation blocks.

Reciprocal rates

President Trump has implemented a reciprocal rate of 26% in India, citing the country’s high duty in motorcycles and other commercial barriers.
Trump has accused India of manipulation of foreign currency and commercial restrictions, saying that the new rate is a necessary counter.

Several countries, including China (34%), Vietnam (46%), India (26%-er -er -corrected up to 27%), South Korea (25%), EU (20%) and others, face higher rates due to their commercial barriers and currency practices.

President Trump has used international emergency economic powers law, pointing to US trade deficit of $ 918 million to justify his aggressive protectionist policies.

Trump has announced wide rates, citing the concerns of economic exploitation by other nations.
Trump argues that these rates will help recover factory jobs, but they can also produce prices.
In addition, additional taxes have been imposed on automobile imports, as well as the steel, aluminum and oil of Venezuela.

The complete list of reciprocal rates disseminated by President Trump:

China: 34%
European Union: 20%
South Korea: 25%
India: 26% (later corrected to 27%)
Vietnam: 46%
Taiwan: 32%
Japan: 24%
Thailand: 36%
Switzerland: 31%
Indonesia: 32%
Malaysia: 24%
Cambodia: 49%
UK: 10%
South -Africa: 30%
Brazil: 10%
Bangladesh: 37%
Singapore: 10%
Israel: 17%
Philippines: 17%
Chile: 10%
Australia: 10%
Pakistan: 29%
Turkey: 10%
Sri Lanka: 44%
Colombia: 10%