US President Donald Trump and trade policy: What should India do?

The country should convert the Trump threat to an India opportunity, re-embracing a more liberal trade regime as a way of reviving manufacturing output and exports

President Donald Trump’s threat to impose reciprocal tariffs on India is both ominous and obnoxious. But it cannot be wished away. So, the country needs to consider: What type of response is in national interest?

 

Answering this question requires realising that India’s trade regime is a sitting duck for the likes of President Trump. The problems are multiple: Magnitudes, uncertainty, and complexity.  

 

First, India’s tariffs are higher than anywhere else. Manufacturing tariffs average 13.4 per cent, more than three times as high as in the US or Europe (see table). Agricultural tariffs are even higher than those for manufacturing, with