Donald Trump’s tariff bomb created panic all over the world.
The impact of Trump’s trade policies resonated worldwide, leading to the most
significant single-day decline in Asian markets in 16 years. Due to this move,
America will be in danger of stagflation. At the same time, there is a danger
of increasing inflation and stopping economic growth in America, which is
called ‘stagflation’. Apart from this, if other countries apply counter
tariffs, then the global trade can become a situation of war.
Impacts on America: Directly, approximately 2% of EU27 GDP
is influenced by demand from the US. With a 20% tariff, it is expected that
shipments to the US will fall by around 15%. A -0.3% direct impact on GDP in
the short term is projected. The countries most affected are Ireland, Germany,
and Italy, while the Central and Eastern European region is less vulnerable.
Indirectly, reduced exports, increased competition from
Asian imports, and heightened uncertainty will result in decreased investments
and wage growth, potentially causing some job losses in Europe. These adverse
impacts are expected to be experienced in 2025 and 2026. If the euro
strengthens and remains so, stemming from the US losing its status as a safe
haven, external demand will decline. Potential retaliation: The only estimate
currently available from the ECB indicates a decrease of -0.2%, though it lacks
detailed breakdowns.
Impact on Asia: The tariff rates in this region are elevated
compared to other areas, primarily due to a strong emphasis on exports to the
United States. This results in a significant effect. Nations such as Vietnam,
Thailand, Japan, and Korea experience the most substantial repercussions, with
effects reaching as high as 5.5% of their GDP.
Impact on China: A decrease of 0.4-0.8 percentage points in
GDP, contributing to excess industrial capacity and deflationary pressures is
expected. In response, the nation has implemented 34% tariffs universally and
imposed export restrictions on rare earth materials.
Impact on India: Trump’s tariff in India is just a
hypothetical panic. India is in good position to benefit from changing business
scenario rather than losing jobs. A bilateral trade agreement (BTA) was
announced after the Indian Prime Minister’s visit to America, which would
streamline trade policies and promote economic cooperation. Additionally,
American participation in the India-West Asia-Europe Economic Corridor (IMEC)
creates new opportunities for India.
There is neither fear of increasing inflation nor danger of
going to job. There is less risk of increasing inflation and employment in
India due to the imposition of tariff by America. India exports about $ 75.9
billion to the US every year. This includes areas such as drugs ($ 8 billion),
cloth ($ 9.3 billion) and electronics ($ 10 billion). The demand in these areas
is expected to remain stable. Employment depends on both domestic demand and
export. Most of the areas exporting to the US from India have been exempted
from fees or they have been levied. Therefore, there is less possibility of
people’s jobs in India
The impact of this tariff policy on India’s economy is
expected to be limited. According to the report of Goldman Sachs, Trump’s
tariff bomb may reduce India’s GDP only 0.19 per cent, which is equal to the
fall in income of INR 2396 per family annually. The reason for this is India’s
strong domestic demand and its limited stake in global exports (2.4 percent).
India is a major trading partner of America. Between April
and February 2025, India has exported goods worth $ 395.63 billion to the US.
Increasing tariffs will definitely affect textile, electronics and agricultural
products. We can understand this in other words that India sends clothes worth
$ 8 billion and $ 5 billion agricultural products to America every year. But
due to more tariffs on countries like Bangladesh and Vietnam, Indian products
will be relatively cheap and exports can get a new opportunity.
