Donald Trump, the president of the United States, had kept the global economy on tenterhooks for the last four months. On 2 April, he announced a set of import tariffs, which started out with an immediate 10 percent baseline tariff on imports from almost all countries. He claimed the measure was to eliminate trade imbalances. The Trump administration then applied individual tariffs rates depending on which countries had the largest trade deficits with the US. Trump called the measures “reciprocal”. Since then, the US has revised its tariff rates for different countries and proposed tariffs for various sectors.
The US first set a 3-month deadline for countries to make trade agreements with it or else the tariff would be imposed. Earlier this month, Trump unveiled a new set of tariffs on at least 20 countries including Sri Lanka and Bangladesh, threatening 30 percent on all goods imported into the US from Sri Lanka and 35 percent on goods from Bangladesh. It has announced a new deadline of August 1.
Southasia’s economy, like much of the rest of the world, has been sustained and has grown due to access to the US markets. Sri Lanka and Bangladesh’s garment sectors are likely to be the most impacted by the tariffs. Trump had earlier announced a 26 percent tariff on India and 29 percent on Pakistan but both countries have been in trade talks with the US since then – the outcomes of those talks are unknown and the impacts uncertain. In India, there are worries over agriculture, steel, aluminium and pharmaceutical exports.
On this episode of State of Southasia, the economist Umesh Moramudali speaks to associate editor Nayantara Narayanan about the impacts of the Trump tariffs on Southasia – the hit on exports, the possible impact on unskilled labour, and the ramifications for balance of payments and debt restructuring in countries like Sri Lanka and Bangladesh.
Listen to the full episode on Spotify, Apple podcasts and YouTube.
State of Southasia releases a new interview every two weeks.
Episode notes:
Umesh Moramudali’s recommendations:
The Wolf-Krugman Exchange (podcast)
The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy – Michael Pettis (non-fiction)
The Dragon’s Gift: The Real Story of China in Africa – Deborah Brautigam (non-fiction)
Between Debt and the Devil – Adair Turner
Further reading from Himal’s archives:
Trump’s approach to Southasia bolsters China’s regional sway
Jayati Ghosh on the USAID shocker and the politics of foreign aid: State of Southasia #19
Trump’s aid cuts have broken global health – but we can fight back
How the IMF bailout is changing Sri Lanka’s foreign policy
Pakistan’s IMF bailout is not without political consequences
Why did India fail to industrialise where East Asia succeeded?