Trump’s tariff tyranny has inadvertently brought rivals together to question the unprincipled tariffs and the unjustified use of his country’s economic leverage.
SHIFTING GLOBAL ECONOMIC ORDER
The balance of global economic power is shifting more decisively than many in the West would care to admit. According to the United States’ own CIA World Factbook, America’s GDP on a purchasing power parity (PPP) basis stood at $25 trillion in 2023. By contrast, just three members of the BRICS grouping —China, India, and Russia—collectively produced $50.3 trillion, which is twice the size of the US economy. PPP, which adjusts for differences in living costs, provides a more accurate representation of a country’s real economic strength than raw exchange rates. On this measure, China alone, with $31.2 trillion, has already outpaced the United States by a quarter. Taken together, BRICS economies are not only larger than the US but, by several estimates, already surpass the combined weight of the G7 bloc.
Additionally, both China and India are growing at a much faster rate than the US. An E&Y report says that, surpassing the USA, with a $34.2 trillion GDP, India may emerge as the second-largest economy in the world by 2038. In most BRICS countries, elite economic thinking remains dominated by the Western view of the world, and many policymakers, planners, and economists are educated in the US. So, as an unfortunate reflex action, the tendency at times is to adopt the Western worldview, often disregarding the size, dynamism, heft, and growth of the economy back home.
TRANSACTIONAL TRUMP
Following World War II, the United States continued to grow and expand, gaining significant military might and economic stature. This process led to the United States’ complete domination of the world after the dissolution of the USSR. Over the years, be it in the name of democracy or fighting communism, it interfered militarily around the globe. While championing democracy where it suited them, the USA, however, did not have any qualms in cosying up with dictators, sheikhs, and military rulers if it suited its strategic interests. She could get away with a lot in the past. Over the last three decades, the world has undergone significant changes, and this pace of change is accelerating. The one-act play with the US as the solo lead has now become a multistarrer. Now, the solo actor does not like to share the spotlight with other emerging stars. With seven to eight decades of domination as given, the denial of eroding influence has been a core part of the US belief system. Trump and the MAGA phenomenon are perhaps the last attempts to glaze over the realities of the modern world order, and this mindless imposition of tariffs—hoping that these would bring everyone crawling back to follow the US script—is part of that naïve thinking. In fact, a Pew report based on 25 nations indicates that the perception of China in the world has improved from 31% to 36% after the tariff imposition, while confidence in the US has gone down dramatically. Trump’s transactional view of all things and his childish impetuousness to come out of each conversation as a winner are the single most significant drivers of plummeting confidence in the US as an ally of any sort. World affairs, after all, are not a Manhattan land deal where you can bully your way through a set of unequally placed tenants and squatters.
Even if manufacturing does return to the US, given the cost structures there and the sense of entitlement many white MAGA supporters take for granted—as compared to the subservient, often exploited factory labour in India, China, Vietnam, and Bangladesh—it is difficult to imagine the US producing labour-intensive goods at anything near the prices it paid before the tariffs. With easy ways to print dollars, the allure of Wall Street, investment banking, and the creation of virtual asset-flamed notional wealth that Americans are accustomed to, the real question is: does the Rust Belt have the capacity to roll up its sleeves and return to the grease and grime of manufacturing?
RISE OF CHINA
When China emerged a few decades ago, the reaction was—oh, it is not a democracy, it is a failed communist system, and something will give. Yet the regime endured and, under Xi Jinping, became more centralised. Hopes of a Soviet Union-like collapse ended long ago. Then it was—oh, China is a low-end, poor-quality manufacturer. Instead, China became the factory of the world, producing everything from sophisticated missiles and warplanes to IT products, pharmaceuticals, and Apple phones. In 1989, after Tiananmen and the Soviet collapse, Deng Xiaoping had given the slogan tāo guāng yāng huì—” hide your strength and bide your time.” China did just that, focusing on its economy, quietly building its military, and concealing its rise. Today, though China consumes more Russian oil than India, the US dare not impose hostile duties for fear of retaliation. Perhaps there lies a lesson for India—that more work and less noise pays.
IMPACT OF TARIFFS ON INDIA
CLSA has calculated that India gained around $2.5 billion, approximately 0.5% of its GDP, annually from discounts on Russian oil. The same estimate suggests tariffs will shave off roughly the same 0.5% of GDP growth. There will be job losses in some US export-dependent sectors, such as textiles and aquaculture, but when weighed against the gains from oil, it is a zero-sum game for India. Trump may have hoped the Indian economy would crumble, but adjustments in supply chains, tricks of trans-shipment, repacking in other ports, and altered documents will ease the pain. The Indian economy has shown resilience in the face of adversities, reassuring the world about its economic stability.
OPTIONS FOR INDIA
The lessons for India are clear. The government has addressed many structural issues in recent years, but the pace of reforms must accelerate further. Judicial delays in enforcing contracts and bureaucratic sloth at the ground level require attention. Pragmatism demands disputes with China be resolved where possible and shelved where not. Trade must be de-dollarised, striking at the heart of US dominance. China and India together contribute 26% of the world’s GDP and represent over 36% of humanity—figures that no bloc can ignore. With the leaders of Russia, China, and India meeting with urgency, the time has come to rethink the world order and reconfigure the West-dominated structures. If not for mediation in wars, Donald Trump still deserves, ironically, a Nobel Prize of sorts—for playing, however unintentionally, the role of a great unifier. Childish tantrums sometimes prompt adults to view the world differently.
