US tariff imposition policies and global trade fractures

Prof D Mukherjee
In a geopolitical move that has rattled international trade dynamics, the United States, under the Trump Administration, announced a sweeping 25% tariff imposition on imports from India effective August 1, 2025. The move is not isolated; it comes in conjunction with similar aggressive tariff measures against Canada, Mexico, the European Union, Japan, China, and South Korea. Alongside, the U.S. has also hinted about undeclared punitive measures against nations purchasing Russian oil and defence equipment, further amplifying global tensions. President Donald J. Trump’s recent remarks-“They can take their dead economies down together”-regarding India and Russia, reflect a stark shift from diplomatic dialogue to open hostility. Trump’s high-handedness, evident in his unilateral approach to foreign relations, has raised alarms among international diplomats and economists alike. His track record in mediating major geopolitical conflicts, such as the Israel-Hamas-Iran tensions, the Russia-Ukraine war, and the so-called self-sponsored “Operation Sindoor” ceasefire between India and Pakistan, is marred by failures and diplomatic overreach.The Trump Administration’s stance seems to dismiss the principles of mutual respect and cooperation that form the backbone of global diplomacy under the United Nations (UN) framework. Observers have been quick to point out the lack of significant geopolitical or economic achievements by the White House since January 20, 2025. The US’s overestimation of its global influence is increasingly seen as a delusion of unilateralism in a multipolar world.
The recent imposition of a sweeping 25% tariff by the United States on imports from India, alongside similar tariffs on goods from Russia, China, the European Union, Japan, and South Korea, marks a significant and contentious shift in global trade dynamics. This aggressive protectionist stance is set to trigger a domino effect across the global economy, disrupting established trade flows, unsettling diplomatic relations, and challenging the very foundations of international economic cooperation. For exporting nations like India, China, Japan, and the EU, these tariffs translate directly into increased export costs, rendering their products less competitive in the American marketplace and threatening their share in a traditionally high-volume trade corridor. Exporters from these nations, already grappling with the complexities of post-pandemic economic recovery, now face the added burden of either absorbing these additional costs, which erodes profit margins, or passing them onto US consumers, thereby diminishing demand. Consequently, this situation exerts downward pressure on export volumes, distorting trade balances, and potentially triggering currency fluctuations as these economies seek to stabilize their external accounts.
The ripple effects extend deeply into the intricate web of global supply chains. Many industries, particularly in sectors such as electronics, automobiles, pharmaceuticals, textiles, and heavy machinery, operate on finely tuned international supply networks that rely on cost-efficient cross-border movements of goods and components. The abrupt cost escalations induced by US tariffs force manufacturers to reassess their logistical strategies, which could involve shifting supply routes, sourcing alternatives, or even relocating manufacturing hubs, all of which are time-consuming and capital-intensive adjustments. Such disruptions not only slow down production cycles but also inject a level of unpredictability that hinders strategic business planning for both exporters and multinational corporations’ dependent on seamless global trade.
For the exporting countries, this tariff onslaught brings with it looming economic slowdown risks. Sectors that are heavily export-oriented, such as India’s textile and pharmaceutical industries or Germany’s automotive sector, face reduced orders, lowered factory outputs, and potential job losses, which cumulatively dampen GDP growth trajectories. Smaller firms with narrower margins are especially vulnerable to being pushed out of the US market altogether. Paradoxically, the United States itself is not insulated from the adverse consequences of its tariff aggression. American consumers will inevitably bear the brunt of rising import costs as businesses pass on the tariffs in the form of higher retail prices, thereby fuelling domestic inflationary pressures at a time when the US economy is already battling economic headwinds.
Moreover, industries within the US that are reliant on critical foreign inputs-such as semiconductors, specialty chemicals, precision machinery, and rare earth materials-may encounter severe production bottlenecks and supply shortages. This could stifle innovation, hinder manufacturing outputs, and exacerbate the already fragile supply chain ecosystem that was exposed during the COVID-19 pandemic. The US’s attempt to coerce economic concessions through tariff intimidation risks backfiring by alienating key trade partners, fragmenting supply networks, and eroding its own industrial competitiveness. Rather than achieving a fortified economic position, such isolationist trade policies might inadvertently push global partners to deepen intra-regional alliances, diversify their trade dependencies, and collectively seek to minimize US economic leverage, thereby diminishing America’s long-term resilience and strategic influence in the global economic order.
The United States’ 25% tariff on imports from India, alongside similar measures against Russia, China, the EU, Japan, and South Korea, marks a disruptive shift in global trade dynamics, threatening established economic interdependencies. For exporting countries, these tariffs sharply increase export costs, reducing competitiveness in the US market and impacting industries like textiles, pharmaceuticals, and automotive components. This will likely suppress export volumes, widen trade deficits, and strain economies reliant on US-bound exports.Beyond direct trade impacts, the tariffs will disrupt global supply chains. Industries dependent on efficient, cost-effective access to the US-especially in high-tech sectors-will face increased operational costs, forcing them to rethink supply routes, production strategies, and partnerships. These shifts could trigger production delays, inflate costs, and dampen economic growth in exporting nations.
Ironically, the tariffs will rebound on the US economy itself. Higher import costs will translate into price hikes for American consumers, fuelling inflation. Additionally, US industries reliant on foreign inputs-such as semiconductors and specialty chemicals-risk facing shortages and production bottlenecks. Instead of bolstering domestic manufacturing, these protectionist measures may erode the US’s integration with critical global supply networks, weakening its long-term economic resilience and competitiveness. The tariff-centric approach is proving increasingly self-defeating, creating more economic friction than advantage.[207]
Professor Kenneth Rogoff, Maurits C. Boas Professor at Harvard University and former IMF Chief Economist, observed that global retaliation against US tariff aggression is inevitable-a scenario now unfolding. Nations targeted by these tariffs are preparing reciprocal duties on vital US exports like agriculture, technology, and aerospace. Simultaneously, countries are intensifying trade diversification through ASEAN, BRICS+, and EU internal markets to reduce dependence on the US. Strategic alliances are being forged to develop alternative trade frameworks, payment systems, and supply chains, minimizing US leverage. As Washington continues its tariff-centric policies, it risks alienating both rivals and allies, eroding geopolitical trust and economic partnerships. Rogoff’s prediction of coordinated retaliation is becoming reality, as nations unite to protect their sovereignty and economic interests. This response is not merely defensive-it signals a transformative shift toward a multipolar economic landscape where no single country, including the US, can impose unilateral trade dictates without facing collective pushback. The emerging order emphasizes balanced, sovereign-driven cooperation over coercive economic dominance.
Professor Rogoff’s prediction of global retaliation is materializing as nations impose reciprocal tariffs on key US exports like agriculture and technology. Countries are intensifying trade diversification through blocs like BRICS+, ASEAN, and the EU, reducing reliance on US markets. Strategic alliances are being strengthened to build alternative trade frameworks. Rather than securing dominance, the US’s tariff aggression is isolating itself, accelerating a multipolar economic order where sovereign nations push back against unilateral American trade coercion.India must counter US tariffs by diversifying exports to Africa, Latin America, and Southeast Asia, reducing reliance on the US market. Strengthening domestic demand through “Make in India,” forging new trade pacts with BRICS+, EU, and ASEAN, and challenging tariffs at the WTO are essential steps. Simultaneously, India should boost technological self-reliance through innovation and partnerships with non-US allies. On Pakistan, India must remain vigilant, strengthen defence and diplomacy, but avoid distractions from its sovereign and strategic objectives.
India must resolutely safeguard its geopolitical and economic sovereignty, ensuring that no external power, including the United States, dictates its policy choices. This requires assertive diplomacy that insists on equal footing in global forums, firmly rejecting unilateral pressures. India must continue to diversify its defence acquisitions and energy partnerships, including strategic ties with Russia, to preserve autonomy. By championing multilateral platforms and investing heavily in indigenous technology sectors like AI, semiconductors, and defence innovation, India can cement its role as a self-reliant global leader, engaging the world on its own terms with strength and clarity.To counter US economic aggression, nations must strengthen blocs like BRICS+, SCO, and RCEP, expand trade agreements excluding the US, and invest in resilient supply chains and innovation-led sectors. Coordinated diplomacy through the UN, WTO, and G20 is vital to challenge unilateral US trade practices. As global interdependence grows, countries like India, China, and the EU are asserting sovereignty, rejecting coercive US policies. The future of global trade hinges on balanced partnerships, reciprocity, and multilateral collaboration-not unilateral economic dominance.
(The author is an Educationist, a Management Scientist and an Independent Researcher)

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