India’s Strategic Response to U.S. Mercantilism in Global Trade

India must navigate the challenges posed by U.S. mercantilism under Trump by advocating for equitable global trade practices. The administration’s protectionist stance contradicts past liberalization efforts, adversely affecting global trade dynamics. Data shows that India’s contribution to U.S. trade deficits is minimal, further emphasizing the misconceptions around India’s economic practices. To secure its future, India needs to challenge these misperceptions and promote systemic reforms focusing on inequality and fair trade.

India faces a critical juncture in responding to the United States’ mercantilist approach under the Trump administration. Historical context shows that the U.S. has often championed trade liberalization policies, beneficial primarily to wealthy nations while producing adverse effects for a substantial portion of the global population, including in advanced economies. Trump’s shift towards protectionism illustrates a departure from established trade norms, significantly impacting the global trading system.

The impact of Trump’s trade rhetoric directed at India has been pronounced, as he criticizes India’s high tariffs and suggests they should be lowered. However, empirical data reveals that India contributes a mere 2% to global merchandise exports compared to 9% by the U.S. and 15% by China. This indicates that India’s economic position does not align with that of an opportunistic trade player, as often suggested by U.S. officials.

U.S. data shows that in 2024, India’s contribution to the U.S. goods trade deficit stood at approximately $45.7 billion, a fraction compared to other nations such as China and the European Union. This disparity highlights the misconceptions surrounding India’s trade practices while illustrating the extent of U.S. reliance on larger trading partners. Therefore, as trade negotiations progress, India’s position remains under scrutiny despite its modest impact on U.S. trade deficits.

The U.S. aims to penetrate into India’s agricultural and dairy sectors, where American products, heavily subsidized, could threaten local economies. With estimates placing U.S. agricultural support at around $118 billion, significantly surpassing India’s agricultural spending, the potential imposition of lower tariffs poses risks to India’s food security and farmer livelihoods.

Despite the evident asymmetries in agricultural support, the Indian perspective against the U.S. must be articulated more forcefully. It is crucial to challenge the notion that Indian tariffs are excessively protective. Furthermore, historical practices show how India previously advocated for equitable global trade during the Doha Round negotiations, emphasizing multilateralism over bilateralism.

While India has experienced significant social and economic challenges, dealing more equitably in trade requires confronting global inequalities rather than capitulating to pressures from wealthier nations. Elevating discussion on systemic disparities may not be conducive to financial markets. However, India’s resistance against one-sided trade practices can help voice the perspectives of many struggling nations, amplifying grievances against the existing global economic framework.

India’s path to economic prosperity necessitates a departure from opportunistic negotiations with U.S. mercantilist strategies in favor of advocating for a more just global order. Achieving a fair economic system will require comprehensive reforms in discourse and prioritization of socio-economic equality, acknowledging that existing political elites may resist these necessary changes.

In summary, India’s response to the U.S. mercantilist approach must prioritize systemic inequality and advocate for a more equitable global trade framework. The historical context reveals that India’s economic role does not align with U.S. claims of exploitation; rather, India’s modest export figures highlight its vulnerability within the global market. Furthermore, the discrepancies in agricultural subsidies and trade practices necessitate ongoing advocacy against imbalanced trade policies. Ultimately, India’s economic future hinges on its ability to communicate its position effectively and push for broader reforms aimed at creating a more egalitarian economic landscape.

Original Source: www.hindustantimes.com