With global GDP rising from US$11.74 trillion in 1950 to US$166.65 trillion in 2023, the last seventy-five years were probably the best for the entire human race. Politically, by the end of the twentieth century, after long years of subservience, almost all countries in Asia and Africa had been freed from the colonial yoke. Additionally, technological and scientific advances ensured that the standard of living of all humanity went up manifold. Today, an average citizen of an average country works in an air-conditioned office, eats fruits, vegetables and food grains harvested at far-off places, uses gadgets made by the best companies in the world, watches matches being played in different continents, and if he so desires, jets off to exotic locations at a moment’s notice.
His ease of living has increased exponentially; 25 years ago, making an outstation call was difficult, now a smartphone can effortlessly connect him to someone living in a distant country. The same is true for railway and plane reservations, money transfer, and a host of other mundane tasks. Such comfort and choice were not available even to medieval kings and emperors. However, this beautiful dream has begun to unravel. The third decade of the twenty-first century has seen strife breaking out in different parts of the world, causing defence budgets of most countries to rise steeply – at the cost of other budget areas.
This fact is borne out by a report of the Stockholm International Peace Research Institute (SIPRI) which states that touching US$2718 billion, global military expenditure recorded its steepest increase in 2024 – the 10th consecutive year of rises. The advent of Donald Trump, as President of the United States, in this fraught scenario, has accelerated the global arms race. Just into his presidency, at the 2025 NATO Summit, Trump extracted pledges of massive increases in defence budgets from NATO countries, which would increase arms expenditure further – cutting social security budgets across Europe, as also aid to poorer countries. The concept of a rules-based world order, which reduced wars and strife, and ensured quick restoration of peace, has almost been abandoned in the new millenium. The Israeli invasion of Palestine, with the full backing of the US, and the human-rights violations unleashed by Israel which Trump endorses – despite entreaties by US allies – shows that international law is history now.
The same can be said about the Russian invasion of Ukraine in February 2022. Given Trump’s ambivalent attitude, hostilities between Russia and Ukraine may not end soon. With the two strongest countries flouting all canons of international law, and winking at each other’s transgressions, there is little scope for multilateral institutions, like the UN, to spread peace and goodwill.
The situation is so bleak that world leaders are now counselling Ukraine to cede its territory to Russia, and are also urging Palestinians to move out of Palestine; showing that might is right, and powerful countries can browbeat their weaker neighbours, at will. Since both Russia and Ukraine were major producers of food grains, a direct fall-out of the Russia-Ukraine war has been food shortages in many countries in Africa, with famine-like conditions in the Horn of Africa. On a smaller scale, this is also the story of the Chinese incursion in Indian territory, with India now ready to repair its relations with China.
The very concept of free trade, which was one of the pillars of economic progress worldwide, has been upended by Trump’s quixotic tariffs. Inspired by the US, most countries have increased tariffs, which harm the global economy; according to classical economic theory, free trade makes nations richer because nations then produce goods and services that they can at lowest cost, which they exchange with other nations who also produce goods they are best at. In this process, everyone benefits; the global prosperity of the last fifty years owes much to free trade.
However, if circumstances do not change, free trade may never be restored. Another victim of Trump’s policies is the world’s fight against climate change. On the second day of his presidency, Trump, by an Executive Order, withdrew the US from the Paris Climate Agreement 2016, and also from all agreements, pacts, accords, and similar commitments made under the UN Framework Convention on Climate Change (UNFCC). Read with the Kyoto Protocol, such agreements imposed obligations on richer countries to assist developing countries in their climate-change mitigation and adaptation efforts – through financial aid, technology transfer and capacity building. Thus, Trump’s Executive Order has dealt a decisive blow to worldwide efforts for combating climate change.
Significantly, in December 2024, President Joe Biden had outlined a plan to cut U.S. greenhouse gas emissions by more than 60 per cent by 2035. Poor countries have suffered the most from Trump’s depredations. Trump has withdrawn the US from WHO, and has discontinued USAID, which since 1961, had successfully focused on promoting global health, reducing poverty, and helping nations become self-reliant. Trump’s ill-advised moves have delivered a cruel blow to the poorest of poor nations, by disrupting their medical supplies and facilities. Americans have not escaped Trump’s ravages; top civil servants and military top brass have been fired at short notice – for not acquiescing in his sometimes-madcap policies.
People whom Trump could not fire, like Federal Reserve Chairman Jerome Powell were openly threatened and humiliated, while as a warning, Federal Reserve Governor Lisa Cook was ousted over unproven mortgage-fraud allegations. The notorious Department of Government Efficiency (DOGE), established by Trump, has shut down entire Government departments; funding has been withdrawn from centuries-old universities; guiding tenets of US policy like Diversity, Equity and Inclusion (DEI) have been discarded; immigrants, who built America are now being labelled as villains. Ironically, Trump’s ascension as President was widely welcomed in India – the country worst affected by his policies. At that time, the thinking was that being right-wing, Trump would be sympathetic to the right-wing dispensation in India. However, right from the time Trump took office, he has singled out India for special treatment.
Recently, Trump imposed a penalty of 25 per cent, in addition to a tariff of 25 per cent on Indian goods, ostensibly for buying oil from Russia, for which the US itself had advised India, and which is being bought in far greater quantities by China. Apparently, some other factors are at work; probably, mis-steps like targeting Sikh separatists in US and Canada, supporting individuals accused of financial fraud in the US, and bombastic statements by some Indian leaders have antagonised Trump, who sees India emerging as a power centre in world politics. Economists have estimated that the new 50 per cent tariff on Indian goods will apply to exports of US$ 50 billion, resulting in around 20 lakh job losses, and roughly a half percent drop in GDP.
Export-oriented units in hubs like Tirupur and Noida are ceasing production of goods meant for the US. India Post is not accepting certain class of parcels for the US. Competing in the US market with a 50 per cent tariff may not be viable, because similar goods from other countries would attract much lesser tariff and be much cheaper in the American market. No concrete plan has been finalised yet, but there is talk of subsidising exports and exploring newer markets; this would not solve our problems in the short run, because changing specifications of goods meant for the US, and finding new buyers in new countries will not be easy.
For the present, lying low and taking well-thought-out decisions would be advisable. Some losses are inevitable but a reset in foreign and trade policies could help the Indian economy in the medium term. So far as Trump is concerned; the entire Western world is at his feet, trying to humour him, lest he turn his malevolent gaze on them. The obsequiousness of European leaders and their high praise for Trump at their recent meeting in the White House were positively sickening.
Ancients had foreseen the current scenario; in Socrates’ debate with the sophist Thrasymachus, the latter claims: “Justice is nothing but the advantage of the stronger” (The Republic). Glaucon, Plato’s elder brother, goes on to explain the Thrasymachean position in Republic II, saying that one who pursues a life of injustice must at the same time be courageous and crafty, strong and shrewd, power-driven and persuasive. But most importantly, the unjust individual must be dastardly and deceptive, yet seemingly just, which would describe Trump to a ‘T.’
(The writer is a retired Principal Chief Commissioner of Income-Tax)