 "Global trade")
This year, the multilateral trading system suffered a severe setback, yet global supply chains displayed remarkable resilience. China demonstrated its dominance over critical minerals and advanced technologies, while India responded to external shocks by deregulating selectively and boosting domestic consumption.
The US unilaterally raised import duties on a wide range of products and moved away, in practice, from the long-standing principle of treating all trading partners equally. It imposed varying tariff rates on imports from different countries.
The US started from a maximalist position and then negotiated trade frameworks with regions and countries such as the European Union (EU), Japan, South Korea, and Vietnam, while holding trade talks with others, including the UK, Pakistan,
and Indonesia.
In return, several partners lowered tariffs on imports from the US and accepted higher tariffs than earlier on their exports to the US, with some also committing investments over time. Strong consumer sentiment and high levels of investment, particularly in artificial intelligence (AI), helped the US sustain economic momentum during the year.
The dispute settlement mechanism at the World Trade Organization (WTO) remained dysfunctional, as the US continued to block the appointment of enough referees to hear appeals. Yet trade flows adapted.
The United Nations Trade and Development (UNCTAD) estimates that global trade in goods and services will exceed $35 trillion, or nearly 7 per cent, in 2024. Trade in goods will account for roughly $1.5 trillion of this rise, or about 6.3 per cent, while services are expected to grow by around $750 billion, or nearly 8.8 per cent. China mounted the most consequential retaliation against the US by hiking tariffs on American goods and selectively restricting exports of rare-earth metals and other critical minerals, underscoring its leverage in global supply chains. The US pulled back from escalation and opened trade negotiations with China.
China also showcased its technological capabilities as Deepseek, an artificial intelligence platform, gained global attention as a potential rival to major US tools. At the same time, it managed to post gross domestic product (GDP) growth of about 4.5 per cent despite weak domestic demand, aided by aggressive exports of manufactured goods. India and Brazil, lacking China’s leverage, chose not to engage in tit-for-tat tariff hikes and instead raised their concerns at the WTO.
India’s Prime Minister Narendra Modi met US President Donald Trump within weeks of his assuming office, setting trade negotiations in motion with the intent of finalising a deal by November.
However, in August, the US imposed an additional 25 per cent punitive tariff on Indian goods, alleging that India’s payments for Russian crude oil were helping finance Russia’s war against Ukraine. Coming on top of earlier tariff layers, duties on some Indian exports rose sharply.
The move hurt labour-intensive sectors like textiles, leather, marine products, gems & jewellery, and engineering goods. In response, the government cut goods and services tax rates on several items to boost domestic consumption, withdrew or deferred some quality control orders, eased some labour laws, pursued trade negotiations with the EU and the US with renewed vigour, concluded trade negotiations with the UK, Oman and New Zealand, and opened talks with other partners.
November export figures showed a healthy 15.52 per cent growth over November 2024, which helped India approach the end of the year with quiet resolve and cautious optimism.
Email: tncrajagopalan@gmail.com
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