Trump tariff will cause a 3% drop in world GDP, this will be the impact on India

The assessment of tariffs imposed by the US on countries around the world is ongoing. However, in the meantime Trump has postponed the decision to increase tariffs on many countries for 90 days. But he has imposed a 145 percent tariff on China. Meanwhile, economists around the world are assessing the impact of this tariff on the world economy. According to a leading economist of the United Nations, global trade may see a decline of about 3% due to the new tariffs imposed by the US. Due to this decline, exports from big markets like the US and China may now shift to countries like India, Canada and Brazil. That is, India is expected to benefit in this tariff war. Pamela Coke-Hamilton, executive director of the International Trade Centre in Geneva, said on Friday that new trade patterns and changes in economic integration could reduce global trade by up to three percent. “For example, exports from Mexico, which are now seen shifting away from the US, China, Europe and other Latin American markets, are contributing to a slight increase in exports to Canada and Brazil, and to a lesser extent to India,” she added.

US exports may decline by $3.3 billion annually by 2029

She said Vietnam’s exports are moving more towards West Asia, North Africa (MENA), the European Union, South Korea and other markets than the US, Mexico and China. Citing the example of the garment industry, she said the sector is important for economic activity and job creation for developing countries. If the tariffs are imposed on Bangladesh, the world’s second-largest garment exporter, it could face a retaliatory tariff of 37 percent, which could reduce US exports by $3.3 billion annually by 2029.

He also stressed that developing countries should focus on diversification, value addition and regional integration to cope with global crises—be it the Covid pandemic, climate change or policy changes. “Even in times of uncertainty, these countries can not only cope with the crisis but also find opportunities for long-term preparation,” he said These estimates were prepared in collaboration with French economics research institute CEPII, based on data before the announcement of the 90-day tariff pause and the imposition of additional tariffs on China.

They estimate that the ‘retaliatory’ tariffs and initial countermeasures that are implemented by 2040 could reduce global gross domestic product (GDP) by about 0.7 per cent. Countries such as Mexico, China, Thailand and southern Africa would be the most affected along with the US.

China will also be active in the trade war

In addition, Wendy Cutler, vice president and managing director of the Washington DC-based Asia Society Policy Institute (ASPI), said that China’s announcement to increase tariffs on US imports makes it clear that China will also be active in the trade war. He said, “China is now ready to fight a long battle. It has indicated that it can also activate other measures it has in response to additional US steps.” Cutler further said that currently a huge duty of 145 percent is being imposed on Chinese imports to the US and 125 percent on US imports to China, which can have a huge impact on commodity trade between the world’s two largest economies.