Tariffs no answer

“History has many cunning passages, contrived corridors, And issues, deceives with whispering ambitions, Guides us by vanities.”

The often-quoted lines from T. S. Eliot’s poem appropriately capture the essence of disruption and instability in the current global geopolitics caused by what may be called ‘Trumpnomics’. They vividly echo the turmoil of current global geopolitics and its cunning intrigues.

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In a world rife with narrow-minded agenda and fragile alliances, we’re increasingly seeing ambitions and personal vanities of leaders becoming louder than the objectives of cooperation and peaceful coexistence. The disruption and turbulence caused by such gestures is challenging the very idea of an international order which needs mutual respect, understanding and stability. Consequently, the idea of ‘rule-based order’ sounds more like a utopia; aspirational but unrealistic.

Nobody can assimilate how bullying, arm twisting, laying sanctions or unleashing tariff wars against more than half the global economies can ‘Make America Great Again’. The United States which is a $28 trillion economy, itself reels under $36.2 trillion debt and has a staggering124 per cent Debt to GDP Ratio. The US trade deficit was $60.2 billion in June 2025. Its imports were worth $337.5 billion while the export was $277.3 billion during the same period. The economic performance of the oligarch is definitely not impressive. But is imposing exorbitant tariffs and unleashing a trade war an answer?

America is not producing enough because over the years it has outsourced manufacturing to China and to the rest of the world. It thus needs deeper soul searching rather than making futile attempts to punish other nations or succumb to its President’s whims. The danger is that in the long run such hasty acts may compound America’s economic challenges and can drive it to isolationism. Perhaps the US under Trump is still under the delusion that it is a unipolar world which it leads and where its wishes are like diktats. But this time it’s faced with two emerging Asian economic powers China and India; both having civilizational pride and independent worldviews not influenced by the West.

If Trump sincerely intends to Make America Great Again, he must rediscover the art of genuine partnership – building bridges of mutual respect, embracing multilateralism, and investing in strengthening relations rather than resorting to coercive policies. It must accept that a multipolar world is a reality, not an illusion. The market flourishes on the fundamental premise of cooperation. It is pegged in the reality that nobody is capable of producing everything. Therefore, businesses and nations must come together and share what they have ~ from capital, labour, technology to raw material. In this ideal case scenario, there’s a win-win situation for all.

Markets and globalization have a unique synergy which also lead to multilateralism and multipolarity. It seems Trump is either oblivious or reluctant to accept this multipolar world order in which geoeconomics is driving geopolitics. With a $4.19 trillion nominal GDP, India is the fourth largest but the fastest growing major economy of the world having 6.5 per cent GDP growth. The projected nominal GDP of China is $19.23 trillion while Russia’s is $2.08 trillion. Together they may pose a difficult economic challenge for the US to manage. BRICS, which is another emerging hefty counterweight to both the EU and the US accounts for 40.7 per cent of the global economy. Besides BRICS, there is also G20, an emerging forum of Global South, of which India has become the voice.

Despite having significant presence and global influence India is still navigating power dynamics dominated by the developed world. G20 shares around 85 per cent of the global GDP, over 75 per cent of the global trade, and about two-thirds of the world population. All the member states of BRICS and G20 have their own national interest and agenda. But nobody appreciates the Trumpian disruption because it disturbs the global order, productivity and supply chain. Is Trump too naïve to understand the implications of his whimsical policies? Is he creating such a global economic disruption that nations will be either forced to lean towards autarky or make hasty readjustments?

Either way, the victim will be global economic prosperity. Not everybody in the US endorses Trump’s shortsighted economic policies and unwarranted trade wars. Larry Summers, former US Treasury Secretary who served both with Presidents Bill Clinton and Barack Obama, told CNN Business in an interview: “We are engaged in a stop or I’ll shoot myself in the foot strategy. It’s hard to know just how adverse the impact will be. But the direction is clear.” Summers believes that tariffs will undermine the competitiveness of U.S. producers dependent on imported goods ~ ranging from automakers to wine distributors. It will ultimately translate into higher prices and reduced incomes for American consumers. The former Vice Chief of the Federal Reserve also expressed similar views.

He said: “Tariffs… are taxes. Discriminatory sales taxes against foreign goods are contractionary ~ pushing up prices and taking away purchasing power from Americans, which makes it contractionary on real output and consumer spending.” There is a fear that such hasty economic policies may lead the US into ‘stagflation’ that is stagnant inflation. Although it’s so far so good, America is a great nation and will remain so not because Trump wants to see it become great, but because of its democratic values, strong institutions, spirit of enterprise and innovation and for being a place which leverages diversity. The sooner Trump realizes this the better it will be for the US and the world.

(The writer is a former Professor of NID, Ahmedabad an author and columnist)