US President Donald Trump on Wednesday announced 27% 'discounted' tariffs on US's trade partner India, saying New Delhi imposes high import duties on American goods.
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00:00Hello and welcome to an India Today special broadcast. I'm Gaurav Sawant. We will talk
00:05about the Trump tariff and impact on India and across the world. And for India, is there
00:14an opportunity in adversity? We'll talk about that in greater detail during the course
00:21of the next one hour. But I have breaking news that's just coming in.
00:24Prime Minister Narendra Modi is in Bangkok for the BIMSTEC or Bay of Bengal initiative
00:35for multi-sectoral technical and economic cooperation countries meet. Foreign ministers
00:41of BIMSTEC countries have met in the run-up to tomorrow's big talks and connectivity,
00:48transnational crime, disaster management and especially post the Myanmar quake, which also
00:54had an impact on Thailand and Bangkok. That's high on the agenda. Prime Minister Narendra
01:01Modi and the chief advisor to Bangladesh's government, Nobel laureate, Professor Muhammad
01:07Yunus, they just met and these images have just been released from that BIMSTEC summit.
01:14So the Prime Minister is flanked by KP Sharma Oli, the Prime Minister of Nepal on one side
01:20and Professor Muhammad Yunus on the other in these pictures. So the Prime Minister is
01:28likely to have a meeting with Professor Muhammad Yunus tomorrow. At least that's what reports
01:33from Dhaka suggest. Initial reports seem to indicate that while Dhaka was very keen on
01:39a one-on-one, a bilateral, but that request was initially not taken well by India. There
01:46was some delay in response because of tensions between the two countries. BIMSTEC, as you
01:51well know, is a seven-nation regional organisation. So Bangladesh, India, Bhutan, Myanmar, Nepal,
02:00Sri Lanka and Thailand, they're all a part of this very crucial grouping in this region
02:06and they focus on fostering technical and economic cooperation around the Bay of Bengal.
02:13Now let's quickly listen in to what Bangladesh's Foreign Secretary, Muhammad Jashimuddin had
02:21to say a short while back about the likely meeting between Prime Minister Narendra Modi
02:27and Professor Muhammad Yunus.
02:30Expecting a meeting between Professor Yunus and Indian Prime Minister Modi, has there
02:35been any request from your side for a meeting?
02:38There has been a request from our side and we certainly hope that this will take place.
02:43I want to quickly cut across to India. Today's Foreign Affairs Editor, Geeta Mohan, joining
02:46us for more on the story also with us is Professor Brahma Chilani. Geeta, quickly, what do we
02:53expect from this meeting? Bangladesh had sought this meeting. What do we expect from it?
02:59Well, there was a lot of talk about whether if there's going to be a meeting or not. Yes,
03:05India waited a while. Remember the remarks made by Professor Yunus did not go down well
03:11with New Delhi. And there was a response by Dr. Jayashankar in his statement that he
03:15made at BIMSEC about the Northeast, that it is not just landlocked, it is the hub. It
03:22is the hub for and stands right in the middle of connectivity when it comes to South Asia
03:29and Southeast Asia. So that's one response by India. But yes, right now, Bangladesh certainly
03:36is an important nation for India and India will engage whoever is in control of Dhaka.
03:44And that's the reason why the meeting is taking place. Top on the agenda for India is going
03:48to be Indian interests, securing Indian interests in Bangladesh, but also more importantly,
03:55the issue of minorities and safety of minorities in Bangladesh. That also is going to be part
04:01of the conversation when Prime Minister Narendra Modi meets with Professor Muhammad Yunus.
04:06Professor Chilani, how would you view the Bangladesh request for a one-on-one with Prime
04:13Minister Narendra Modi? And what do we expect in terms of an outcome? More than just a handshake
04:19when they meet?
04:21Boro, Bangladesh is slipping into violent jihadism under Yunus. Yunus has released terrorists
04:30and al-Qaeda sympathisers from prisons. The Islamists in Bangladesh are working to re-wake
04:36society including overturning the secularism that has largely defined Bangladesh since
04:42its independence from Pakistan. Today, those who sponsored and supported the 1971 Bangladesh
04:48genocide are calling the shots. In fact, Yunus regime has in its council of advisors or the
04:56council of ministers, Islamists. But by releasing violent Islamists and terrorists from jail,
05:03Yunus has set in motion the radicalisation of Pakistani society. More importantly,
05:09the Yunus regime has also whipped up anti-India sentiment. So a Modi-Yunus bilateral at this stage
05:18before Yunus has made any course correction would send an unfortunate message.
05:23That's a very pertinent point you make. But if that meeting is held as Bangladesh
05:30seems to be confirming, can India send across that very strong message? This slide into
05:37radicalism is a cause for concern for India and must be checked forthwith or will that be water
05:45of a duck's back when it comes to the jihadists in Bangladesh and Professor Yunus heading the country
05:51for now. As you know that since last August, since the time when violence was unleashed against
06:01minorities, especially the Hindus, the Modi government has done little more than issue
06:07occasional statements and those statements have done little to contain attacks on minorities.
06:15So, any kind of stern message that Modi might seek to send to Dhaka will actually be seen in
06:23Dhaka as India accommodating the Yunus regime because this bilateral meeting between Yunus
06:30and Modi will be seen by Islamists in Bangladesh as well as Yunus and his ilk as India coming round
06:42to accepting the Yunus regime. That's a very, very interesting perspective and we'll keep an
06:49eye on that story very closely. I call this kind reciprocal. This is not full reciprocal. This is
06:57kind reciprocal. But what we do is we cut it in half, we charge him. My answer is very simple.
07:04If they complain, if you want your tariff rate to be zero, then you build your product right here in
07:10America because there is no tariff if you build your plant, your product in America.
07:16So, US President Donald Trump's reciprocal tariff plan has taken the world by storm. Donald Trump
07:23slapped what he calls discounted tariff on multiple countries across the world including
07:28India. So, that's the chart that he put out from China to European Union to Vietnam. Let's take
07:34this country specific. Let's talk about India first. So, it's 27 percent reciprocal tariff
07:39that's been imposed on India. He calls it discounted tariff in return for India's imposition
07:44of 52 percent tariff on US imports as he put it. Let's now talk about China. It's 34 percent.
07:51Vietnam has been hit by 46 percent. Taiwan by 32 percent. Let's now next talk about Vietnam. Like
08:00we told you, it's 46 percent. Japan is 24 percent. A close ally 24 percent. South Korea faces 26
08:09percent. European Union 20 percent and European Union is now talking about the retaliatory
08:16measures that they intend putting in place. Switzerland's been slapped with 31 percent
08:20but Switzerland says we will not be reacting to this. United Kingdom 10 percent. Again,
08:27it's the same. So, there's no confrontation there. Cambodia, a massive 49 percent and this
08:35is the impact on supply chain countries. China's supply chain countries. Bangladesh. Remember
08:41Professor Muhammad Yunus was talking about in Beijing that you manufacture in Bangladesh and
08:46then export to the United States. Well, good for them. 37 percent has been imposed on Bangladesh.
08:52Sri Lanka 44 percent. So, the US is very clear. China's supply chain countries also will be
09:00bearing the brunt. Madagascar 44 percent. So, these are the tariffs that have been imposed
09:06on different countries across the world by President Trump.
09:13Blame former presidents and past leaders who weren't doing their job. They let it happen
09:18and they let it happen to an extent that nobody can even believe. That's why effective at
09:22midnight we will impose a 25 percent tariff on all foreign-made automobiles.
09:33Thank you. Johnson and Johnson, great company, 55 billion dollars. Eli Lilly, 27 billion.
09:40MEDA is investing 500 billion dollars. Wow. DIMACC is investing 20 billion. CMA,
09:51CGM, 20 billion dollars. And then you have Merck and Clarios, Stellantis, General Motors,
09:57GE Aerospace, Honda, Nissan, Hyundai are all putting in billions and billions of dollars
10:04and they're committed 100 percent. Likewise to all of the foreign presidents, prime ministers,
10:09kings, queens, ambassadors, and everyone else who will soon be calling to ask for exemptions
10:15from these tariffs, I say terminate your own tariffs, drop your barriers, don't manipulate
10:22your currencies. They manipulate their currencies like nobody can even believe, which is a bad,
10:28bad thing and very devastating to us. And start buying tens of billions of dollars of American
10:34goods. Tariffs give our country protection against those that would do us economic harm. And
10:40many people were looking to do us economic harm. Maybe not so obviously, but they were doing
10:48tremendous economic harm. But even more importantly, they will give us growth. These
10:53tariffs are going to give us growth like you haven't seen before. So U.S. President Donald
10:59Trump has announced 27 percent reciprocal tariffs on India. Calling Prime Minister Narendra Modi a
11:04great friend, Donald Trump said India's tariffs are tough and they have not been treating the
11:10United States right. But there is a big silver lining for India. There are several exports
11:16that are exempt from these tariffs and this includes pharmaceutical products, semiconductor
11:23copper, lumber and other critical material. India is analyzing and weighing possible opportunities
11:31as a result of these tariffs. Yes, there are challenges, but there are also opportunities.
11:41Yeah, very, very tough, very, very tough. The Prime Minister just left. He's a great
11:47friend of mine. But I said you're a friend of mine, but you're not treating us right.
11:52They charge us 52 percent. You have to understand we charge them almost nothing for years and years.
11:57The United States charges other countries only a 2.4 tariff on motorcycles. Meanwhile,
12:06Thailand and others are charging much higher prices like 60 percent. India charges 70 percent.
12:13Vietnam charges 75 percent and others are even higher than that. Likewise, until today,
12:19the United States has for decades charged a 2.5 tariff. Think of that 2.5 percent on foreign
12:28made automobiles. The European Union charges us more than 10 percent tariffs and they have
12:3520 percent. That's much, much higher. India charges 70 percent and perhaps worst of all,
12:41are the non-monetary restrictions imposed by South Korea, Japan and very many other nations.
12:47As a result of these colossal trade barriers, 81 percent of the cars in South Korea are made
12:55in South Korea. Ninety four percent of the cars in Japan are made in Japan. Toyota sells 1 million
13:03foreign made automobiles into the United States and General Motors sells almost none.
13:08Ford sells very little. None of our companies are allowed to go into other countries.
13:18And
13:42hours after the U.S. president announced his reciprocal tariffs,
13:46markets in India reacted with alarm only to recover later in trade.
13:56The revelation that sectors like pharmaceutical, copper, energy and bullion and precious metals
14:03have been exempted from the tariffs energized investors. All these sectors are big contributors
14:09to the export kitty. The first phase of new tariffs on India will kick from 5th April. The
14:17rest 17 percent will go into effect from 10th April. They will exclude vehicle and auto spare
14:24parts as well as steel and aluminium, which already attract 25 percent tariffs.
14:32Exporters feel the tariff put India in a better position than its big competitors,
14:37China, Bangladesh, Vietnam and others.
15:08The U.S. has been the largest export market for India in the past few years.
15:23What also made India a prime target for the tit for tat tariffs
15:27is the huge trade surplus India enjoys with the U.S.
15:31The opposition rained fire on the Modi government over the 27 percent U.S. tariffs.
16:02India has imposed a reciprocal tariff of 26 percent on India.
16:16Politics aside, economists too have been apprehensive about the impact of the U.S.
16:34reciprocal tariffs on the Indian economy. Prior to the imposition of tariffs, economists had
16:41projected a 10 to 30 basis point hit to India's GDP growth from the U.S. tariffs,
16:47in part due to export restrictions and in part because of the economic uncertainty.
16:54Bureau report India Today.
16:59So at the Rose Garden in the White House, U.S. President Donald Trump dropped the global tariff
17:04bomb at 1.30 a.m. Indian Standard Time. The U.S. shock and awe campaign is well known,
17:12but this is being described as shock and horror with the world on tenterhooks.
17:18The Spanish Prime Minister was quoted saying that tariffs are a unilateral attack by the U.S. on
17:24Europe, but 27 percent tariffs on India. President Trump calls it discounted reciprocal tariffs.
17:31What does this mean for India? Is there an opportunity here for India?
17:35Opportunity in an adverse situation. What will the impact be on India, China, EU,
17:42the U.S.? We'll talk about that in greater detail. Joining me on this India Today special broadcast
17:46is Siddharth Zarabi, Managing Editor, Business Today. Geeta Mohan is India Today's Foreign
17:50Affairs Editor. Professor Brahma Chilani, former advisor to India's National Security Council,
17:55somebody who keeps a hawk eye on developments here, and PN Vijay joins us as an investment
18:01banker, investment guru on this special broadcast. Geeta, the Department of Commerce in a statement
18:07said they're carefully examining the implications of various measures and announcements made by the
18:12President of the U.S. They're also studying opportunities that may arise due to this
18:18development. Now, what are the opportunities that India is looking at, or are we to understand
18:25that we are going to cope till a BTA or a bilateral trade agreement is reached by perhaps by fall?
18:31Well, Gaurav, it's both. Like you said, opportunity and adversity, and that's what
18:36is going to happen over here. Let's zoom out a little. Prime Minister Narendra Modi is at the
18:41BIMSTEC Summit in Thailand, and the message from there has been about how to diversify and ensure
18:50that there are alternatives. So, is India going to become an alternative? We're speaking to people
18:55from Thailand, trade representatives of the government, Umesh Pandey, and he said that this
19:03is really an opportunity where the Southeast Asian and South Asian countries can come together,
19:08look at alternatives, look at not just in terms of manufacturing, but also markets to ensure that
19:16all the countries are able to absorb the shock of these reciprocal tariffs. So, India is going to,
19:23or can become a major player here. Is it going to be an uphill task? Yes. But the other thing
19:28also has to do with the fact that there's some exemptions we've got, there's some others that
19:32are going to be hit hard. But for India, this is a moment, this is a time period which is locked
19:41up until fall, when the BTA has to be signed, as was announced by the leaders of the country.
19:49Okay, Siddharth, let's talk about the impact on India specifically. As bad as was expected,
19:56worse, or with exemptions, as Geeta was mentioning, for pharmaceuticals, energy, semiconductors,
20:02copper, some minerals, is there a silver lining here? Well, you know, before I answer the direct
20:07question on India, let me provide you an update with what is happening, even as we speak in the
20:13US stock markets. Very clearly, these tariffs have shaken US companies to the core. There's
20:22a bloodbath happening all across stock markets in the United States, and elsewhere, depending on
20:28which time zone you live. Markets all over have lost trillions of dollars, and perhaps this will
20:34be one of the worst single day losses that the United States market will see. And that will,
20:40in turn, feed into emerging markets and economies like India as well. On your question with regard
20:48to the India impact, you know, look at the tariff slabs. It starts at 10%, that is now a universal
20:56slab. No one escapes 10%, including those countries that have for decades allowed the US to
21:04export into their markets at 0%. You may be an ally, you may have a free trade agreement,
21:10you may have a most favored nation, you may have bent over backwards, you may have allowed American
21:15bases to be set up, you might have supported the American war machine, nothing, nada, nothing works,
21:2210%. And that goes up from 10 to as much as 60%. At the top end is China. And you know,
21:32India is somewhere in the middle, it's actually 27%. So you could say for India, it's a halfway
21:39house. The government has called it a mixed impact. And here is what is at the center of it.
21:47For India, the trade relationship with the United States is very significant.
21:53Equally significant is the security and wider strategic cooperation relationship. And it's
22:00very clear, Gaurav, for months now in the run up after Trump took office, the recent actions
22:07and what will now come, India is making all effort to ensure that the impact is minimal.
22:15There are, of course, multiple options before us to diversify our trade. But for now,
22:20there will be an impact. But I think India is somewhere in the middle of what is a world war
22:26as far as the global tariff order is concerned. That's a strong word. It's a world war when it
22:32comes to tariffs. There are some commentators, Professor Chilani, who've even used terms like
22:39Harakiri. Is that what has happened? Do you see this as a world war? Let's talk about the bigger
22:45picture. But I also want your opinion, Professor Chilani, on what this means for India, the
22:51reciprocal tariff, a clear indication that India and US must push for BTA by fall.
22:59Well, first, on the larger issue, tariffs are front and center on Trump's agenda,
23:05as he seeks to revamp the global trading regime in an effort to secure American advantage.
23:12He's seeking to beat back the flood of imports and force American companies to invest in
23:17domestic production capacity and bring supply chains back to the US. So he is expecting
23:24short-term pain to be inflicted on Americans due to his tariff-related actions. But he is
23:33deploying tariffs both as a negotiating instrument to extract concessions from trading partners,
23:41and some of the trading partners have already wilted under his pressure or threats.
23:46But some of his tariffs are also going to stay in place as a regular source of revenue for the US
23:53to help cut the US trade deficit and balance the budget. In relation to India,
23:59Trump's tariff threat and then his actual slapping of tariffs on India have put India
24:06on the defensive. And so these tariffs have compounded India's dilemma, because
24:14like the US, India has an overall trade deficient with the world, a large trade deficient with the
24:20world. But while the US trade deficient with the world makes up about 4% of its economy,
24:29India's overall trade deficient makes up more than 10% of its economy. So this additional
24:35tariff burden that Trump has imposed on India, as well as what it means for India,
24:43will compound India's challenges in the near term. Okay, so our challenges are going to multiply,
24:49perhaps be compounded in near term, as you say, Mr. Vijay. Donald Trump refers to Prime Minister
24:55Narendra Modi as a close friend. In the same breath, he speaks of high tariffs that India
25:00imposes, and then imposes 27% reciprocal tariff. Now, compounds India's problems, would you look
25:07at it as a mixed pack? Would you look at it as a setback? How does it impact various sectors in
25:12our country, gems and jewelry, for example, where there are some apprehensions, there could be
25:18massive job losses? Well, let's look at the threat and then the opportunity.
25:25First, the threat, let us look at the math. We exported about $85 billion of goods, services are
25:32outside the tariff right now. Out of this 85 billion, if you take away pharma and energy
25:39products, which have been exempted from tariffs, it's about 60 billion. And 25-27% of that is about
25:4615 billion US, which is about 0.3% of the Indian GDP, which is, in my view,
25:53pretty insignificant. Just to compare a bad monsoon will have an impact of about 2% on the
25:58Indian GDP. So in terms of impact, a lot of the hoo-ha is not based on facts. Okay. Secondly,
26:07the people who turned around and say that's fair enough. And as the speaker was just saying,
26:12we have this 3% fall in the stock market in Europe and US. Clearly, there is fear of a US
26:19recession. And that might translate into a global recession. Well, it's very early to talk about
26:26such things. It's possible. But right now, it's too premature to talk about such things. Right now,
26:32the US economy is in pretty good shape. So the first point is, as far as these tariffs are
26:37concerned, the direct impact on India is relatively less. China, for example, exported
26:42450 billion dollars to the US. Bangladesh is facing a much bigger tariff. Vietnam is facing
26:49a much bigger tariff. In fact, the textile stocks in the Indian stock market hit the upper circuit
26:55today, as this was seen as a great opportunity for Indian textiles to get back into the game.
27:01Very interesting, you should point that out. Go on, sir.
27:04Yeah, if you look at the bigger picture, you know, we talked about it in another program.
27:11We reformed in 1991 because of the bad economy and the IMF threat. Probably, this is an
27:18opportunity for India to look inwards. Everybody knows about the 90 compliances that a company has
27:25to go through before it can export a dollar of goods out of India. We know about the Inspector
27:30Raj. Probably, this is a good time for Prime Minister Modi to blame Trump, to use Trump and
27:37set the Indian house in order in terms of doing business, in terms of making India more export
27:43competitive. Look at the gems and jewelries, which you just now mentioned. 90% of the component of
27:50gems and jewelries imports. We get uncut diamonds on which these people have to pay a huge import
27:55duty, which is why the price is high. Now, India has to look inward. It doesn't, you know, it
28:01doesn't matter whether Trump is a good guy or a bad guy, whether he says things are ripped apart,
28:06that's all, you know, that's all talk. But we have to look and say, is it, are we justified in
28:13putting this duty on Harley Davidson, on Bourbon? Who is it helping? Who is it helping? What is all
28:19this? Vestiges of old socialist days. Very interesting perspective and several people
28:25have, you know, you're rightly pointing this out. Are we too protectionist in your appreciation
28:31also, Siddharth? Is it time for India to open up? This is the aapda mein avsar for Prime Minister
28:38Narendra Modi? Well, you know, it's, it is true that in the past 10-11 years, we have followed
28:46in some sectors, a policy of import substitution. Laptops being just one example where we had put
28:52some curbs. Make in India is the overall rubric framework under which Prime Minister Modi has over
29:01two successive terms tried to encourage domestic employment creation and enhance manufacturing
29:08capacities in India. But will make in India suddenly become make in America? No, that's not
29:16going to happen. What is the way out really? Empirical data and multi-decade data suggests
29:23that any economy which has lower moderate tariffs is able to grow at a faster pace because import
29:31substitution is not easy to do. There is technology denial. There is lack of capital. There is lack
29:36of expertise just to give those as a reason. I think what is very clear is that for India and
29:45India specific efforts that have been made in terms of protecting our trade,
29:50there is a delicate balancing act that will have to happen. One quick point, Gaurav,
29:56the worst affected is Asia and South Asia, a country like Vietnam. And I just want to throw
30:04one example for our panel and for you. Nike has dozens of factories in Vietnam. It is said to
30:13employ almost 450,000 people in that country. If you look at that stock and if you look at the
30:19tariff impact, Nike will have to rejig half of its entire operation. So this is going to be
30:27cataclysmic. Will India benefit? Can other companies now come to India because we are
30:33somewhere in the middle, move away from high tariff zones? And finally, the absurdity of the
30:40calculation is also apparent. Lesotho has been hit with 50% tariffs. So I think as our panelists
30:48are saying, we will get greater clarity. But the big picture is that what Mr. Trump seems to be
30:54doing is to append 40 years of outsourcing within less than four months of his tenure.
31:02I don't think it's going to even happen pan out fully in four years of his term.
31:06Is there a genuine apprehension, Professor Chalani, before I bring in Geeta, is there a genuine
31:11apprehension this could lead to recession as many, including Barclays, you know, they have
31:18they have this apprehension and they've assessed that there's high risk of recession in the US.
31:23And given India's $35 billion trade surplus with the US in 23-24, how much of this tariff is
31:30genuinely about creating a level playing field or reducing that surplus? And how much of it
31:36is a political signal to appease his voters, the domestic US interest, sir?
31:42Trump is seeking to do what he promised during the election campaign.
31:48He's also doing what he said he would do in his inaugural speech. He said in his inaugural speech
31:57that he will tariff and tax foreign countries to enrich Americans. Now, this is what he's
32:05thought out. This is what he is seeking to do now. And he has not ruled out recession in the
32:12short term. So, he understands the risks of what he's doing. But I think the country that is
32:19going to bear the brunt of Trump's tariffs is China. The focus has been on 34% tariffs that
32:28Trump announced on China. We should not forget that he's also slapped two rounds of 10% tariffs
32:36on China since February. That's 54% in all. Add to that the up to 25% tariffs on China that Trump
32:44imposed in his first term. Then Joe Biden also imposed some tariffs on China during his presidency.
32:52So, the tariffs on China now, US tariffs on China are approaching 80%. So, China will
33:00clearly bear the brunt of America's tariff war. And for India, this imposition of tariffs by Trump
33:10is an opportunity only in relation to China. India has run a huge trade deficit with China
33:16that it has partly offset by running a trade surplus with the United States. But now, India
33:24finally has to resort to raising tariffs on imports from China. So far, it has allowed imports from
33:31China to flood its market. Even non-essential items have flooded Indian market. The Modi
33:39government has done nothing to stop non-essential imports from China flooding the Indian market.
33:45At least he can borrow, Modi can borrow a leaf from Trump's book by raising tariffs on non-essential
33:52imports from China. Because there are very sweet words coming from China and I'll come to China
33:58in greater detail in just a moment here. And Geeta also has a big smile on her face because Geeta,
34:04if I may quickly, President Xi Jinping, you know, he said the sweetest things when it comes to
34:12India-China relationship and said, you know, these are countries that need to sink their
34:18differences, the tango that he talks about between the dragon and the elephant, neighbours should
34:24find ways to coexist peacefully. And he's ready to deepen communication and coordination on major
34:31international affairs. Is all of this aimed in a way at trying to wean India a little away from
34:37the United States of America and is that even possible? Well, not possible to wean India away
34:44from America completely because India is engaged. India knows what it needs to do. Like we've been
34:50reporting, there is a BTA conversation and negotiations that are underway. Not to forget,
34:56there are Chinese troops still sitting where they shouldn't be. The withdrawal and disengagement is
35:02not complete. So, China at this point in time, while India should be looking at opportunities,
35:09China is pushing for those opportunities and trying to ensure that the Asian giants, particularly
35:16massively growing economic powers such as India, looks to China, looks to Beijing. India is going
35:22to do all it can to ensure that the brunt of these tariffs are not felt by consumers in India,
35:28by the people of India, and therefore will engage China and is engaging China, but not because
35:34it's looking at Beijing's interests. It's looking at Indian interests. It is in India's interest
35:41to engage all countries, including China, till the time that we don't figure out how to balance
35:48our reciprocal tariff and the reciprocal tariff war, so to say, and the brunt of that that will
35:58be felt in the coming months. You know, before I bring in PN Vijay once again, Siddharth,
36:04India continues to import even non-essentials from China, and this has been an argument over years
36:10and years, and especially after Galwan, that we really need to reduce imports from China.
36:16Why is it that, fine, essentials you need to bring in. Why are we still importing non-essentials,
36:22and how do you view the sweet words that suddenly come from Chinese President Xi Jinping?
36:27You know, let me try and answer that question indirectly. As we've been digesting and dissecting
36:34this announcement by President Trump, it's clear that China is not being targeted directly alone,
36:42it's also being targeted indirectly. There are Southeast Asian countries where a lot of Chinese
36:50capital and manufacturing activity happens, which then gets exported to the United States. So,
36:58there will therefore be a significant clampdown on direct exports and indirect exports,
37:05because remember, China has a massive footprint across the world. It soaks up commodities and
37:12puts out finished products through multiple countries. That's been its trade strategy.
37:17Vietnam and Cambodia are just two examples of that. Therefore, what does that mean for India?
37:24If different countries and producers are going to de-risk from China, then we could be beneficiaries.
37:32But remember, Gaurav, this question of China plus one came up originally after COVID, and there was
37:39a lot of discussion that the supply chain needs to have, you know, a backup and therefore come to
37:44India. Not much has happened. Why has it not happened? The jury is out on that. But I would
37:50say that for India, this is an opportunity for a big bank opening up, a big bank deregulation,
37:58making it easier for investors to come in, not just through headline changes of FDI limits,
38:03but for actually the ease of doing business, opening business, running businesses on the
38:09ground. And like you and I know, the traffic blocks that we face in our megacities are akin
38:16to the traffic blocks that large corporations, medium sized small corporations face in India.
38:22There is a compliance Raj that exists in this country, even 35 years after the original license
38:28Raj was dismantled. And this is a test case because when Prime Minister Narendra Modi was
38:32sworn in for the first time in 2014, his visit to Japan and I'd reported on that visit to Japan,
38:38he'd spoken of ease of doing business in India, a special office being created in the Prime
38:44Minister's office to ensure single window clearance. Why is all of that not happening?
38:48Or if it's happening? Why is it not being seen as effective? Mr. Vijay, the Chinese want drop to its
38:55lowest level in weeks, China, and as Siddharth was mentioning the Chinese supply chain countries,
39:01they are being hit hard, China's warning of retaliatory measures. Now, is this going to lead
39:07to an escalation, a trade war? Will that have a domino effect on the economy? And is this once
39:14again, an opportunity in adversity for India? There is surely going to be a lot of problems
39:24in global trade, with all these duties slapped on Asian countries, especially China and countries
39:30which are very close to China in the supply chain, that's for sure. And we really don't know
39:36where it will end, who will bend first, who will walk the talk and so on, even EU. Where does this
39:43leave India? I really feel that if India plays its cards right, India can come out as a major
39:50winner. Of course, we have a very good relationship with the US over time. That's a big plus point.
39:56Secondly, in terms of competitiveness, India can be as competitive. We have a huge knowledge pool.
40:04We have a huge domestic market to supplement manufacturing. We have everything going for us,
40:12except the overburden of government controls, government compliances. So if we can get our act
40:18together, I see no reason why we cannot have a multiple jump in India's exports to the US,
40:27even to China. I think the mindset should not be, we are getting all sorts of unnecessary
40:32things from China, we should stop that. That's the old Nehruvian socialism mindset. That's what
40:39we did from 1947 to 1991. Oh, this is not essential. We'll stop it. So we had Fiat cars
40:45and Ambassador cars. Remember that. So that is not, is this essential? What we have to think of
40:51is the Indian consumer. If the Indian consumer is paying less for buying a lamp, which comes
40:57from China, why not? So it is for India to make better lamps at a cheaper price. So I think the
41:02story for the Indian businesses, I think Indian business, to be honest, has got pampered a lot.
41:07What is the production linked incentives? They are giving such huge companies so much of taxpayers
41:12money for what? How much employment have they created? Is there data to show that all that
41:17money, taxpayers money has created jobs in India? Can we say PLI is a success in what terms? So I
41:23think it is for India Inc also to look in and how to become more globally competitive. I think that
41:29is the story here. So that's a very pertinent point. You know, for decades, we were compelled
41:36to buy the Fiats and the Ambassadors. Maruti was a revolution. But even now, you know, why don't,
41:42if the GMCs and the Fords or the Japanese cars, they come in and there are cheaper prices,
41:49electric cars come in, which are cheaper, then let our automobile companies be equally good.
41:55Of course, you would, you know, perhaps need to give them a little protection, you know,
41:59till the time they come up to scale, or is it enough of protection so far?
42:04You know, when the Bombay club was dismantled after the 91 reforms, in some ways,
42:11Indian industry had some challenge. From then to now, you used auto as an example.
42:17Let's look at the auto sector. We have a very significant and robust auto manufacturing and
42:24auto component manufacturing base in this country. If you look around this region,
42:29barring China, I would argue that we have one of the strongest auto manufacturing bases in
42:34this country. This is the result of almost 40 years of calibrated policymaking and decision
42:40making. Yet today, the dominant auto companies by market share in India are all foreign owned.
42:48Suzuki, Hyundai, look at Toyota. There was a time where industrial policy and
42:54FDI restrictions allowed for joint ventures. Now, 100% foreign owned companies. This is just
43:01one example, Gaurav, of how it has panned out over the years. Should we have opened up and become a
43:09basket economy like some of our neighbors, where they can't even manufacture wheelbarrows or
43:15three wheelers? No, we should not have. The fact is that there's been a trade policy of 40 years,
43:21okay, that included India joining the WTO far ahead of China. I think we are now at a pivotal
43:28moment. And that's why I say, you use that term, Abda Mein Avsar, I think turning that into reality
43:36will be the biggest expectation now on this government and our Prime Minister and Commerce
43:42Minister and all the other officials. Very, very interesting. And what's heartening is there's
43:48hope that yes, there's a threat, but there's also an opportunity. Geeta, trade ministers of China,
43:54Japan and South Korea, they've been meeting and strategizing a way to deal with the impact of
43:59reciprocal tariffs. And Donald Trump specifically referred to automobiles. And since we're staying
44:04with automobiles for a moment that are manufactured in Japan and South Korea, he said only 2.5%
44:10tariff is what they pay on exports to America. Almost no GMC vehicles or Ford vehicles are sold
44:19either in Japan or in South Korea. So how are countries like China, Japan and South Korea
44:25negotiating through these headwinds? Well, Gaurav, Donald Trump had a very important statement when
44:31he said that there are unfair trade practices that America has been facing and suffering
44:39from allies and adversaries, enemies, but particularly the allies are far worse.
44:48And in such a scenario, you're looking at countries that are betting wars coming together
44:55and looking at how to weather the storm of reciprocal tariffs coming in from the United
45:02States of America. It was after five long years of a hiatus that we saw these countries coming
45:09together and having a conversation, negotiating on a trade. And that in itself is a huge thing.
45:17So the question that America should be looking at and should seek answers of is, are these policies,
45:26is he making these countries come closer and will that help America in the longer run?
45:32Japan, China, South Korea coming together. He does have a point, Ford shut shop in India. So yes,
45:39there is going to be a lot of arm-twisting in manufacturing, moving to the rust belt
45:44and revival of the rust belt in the United States of America. But at what cost?
45:50Professor Chilani, the last 30 seconds I have on this part of the show, I just want to understand
45:54from you. Yes, we have a $35 billion trade surplus if you were to look at last year's
45:59figures. But was there another way to offset that, import more energy, get more defense hardware?
46:07We're looking for fighter jet engines that were delayed. So critical technology delayed.
46:13All of that, were those better ways of negotiating instead of this?
46:18Well, there are two things that we should bear in mind that in terms of the US-India trade,
46:24three items besides services dominate US-India trade. One is oil and petroleum products,
46:31second is military equipment and third is gems. So the scope for further imports of American oil
46:42and petroleum products is limited given the fact that the Americans don't provide discounts to
46:50India or any other country. But India still is increasing imports of American energy resources.
46:58But look at the larger picture. India is an import-dependent economy,
47:03not an export-driven economy. This is very unlike other major Asian economies.
47:09India, unlike most other Asian economies, has a domestically oriented economy that
47:16relies on domestic consumption, not exports for its growth. And then all this talk about tariffs
47:23and export competitiveness, we should not forget that many of our exports rely on imported inputs.
47:31Yes. So when the rupee depreciates, even our export competitiveness suffers.
47:39Impact, gets adversely impacted. But I think the bigger issue we should not forget is that
47:44Trump has been in office for less than 100 days. He has already dramatically
47:50reoriented American foreign policy. He has reoriented American trade policy and his
47:56policies are having global impacts. This is apparent from the emerging shifts in global trade,
48:02in geopolitical alignments, in defense strategies, and also in environmental commitments.
48:08And most importantly, it's clear already, in less than 100 days of Trump in office,
48:15that his main target is China. He's leveraging tariffs and trade policies to disrupt China's
48:22export-driven economy. He's also trying to incentivize American companies to reshore
48:27manufacturing. That will further weaken China's role as the world's factory.
48:33And this is where there's a great opportunity for India, if India is nimble-footed. Mr. Vijay,
48:41Professor Brahmachalani, Siddharth Zaravi and Geeta Mohan, as always, many, many thanks for
48:46joining me here in this conversation on the adversity and the opportunity that lies ahead
48:54for India. Can we capitalize on this opportunity remains the biggest question.
49:02U.S. President Donald Trump's tit-for-tat tariffs have led to a global meltdown. The U.S. President
49:08announced a minimum baseline tariff of 10 percent on all imports to the United States of America,
49:14with higher rates on countries that have the highest trade deficits with the United States
49:19of America. So the tariffs vary from 10 percent, which is the baseline, to 49 percent. Global
49:26economies from the European Union to Australia, Asian giants, China, Japan, South Korea, they've
49:32hit out at the U.S. tariffs. There are some countries that are talking about meetings to
49:38have effective countermeasures in place. World economy is yet to fully recover from the post-
49:49pandemic inflation surge. It's weighed down by record debt and unnerved by geopolitical strife.
49:55On top of that, it is now slapped with the latest round of U.S. trade tariffs unveiled on Wednesday.
50:01President Trump's announcement of universal tariffs on the whole world,
50:08including the European Union, is a major blow to the world economy. I deeply regret this choice.
50:17Let's be clear-eyed about the immense consequences. The global economy will massively suffer.
50:25Uncertainty will spiral and trigger the rise of further protectionism.
50:32Within hours of the U.S. president's reciprocal tariff announcement,
50:36Brazil's Congress unanimously passed a reciprocity bill to allow its government
50:41to retaliate against any country or trade bloc that imposes tariffs on Brazilian goods.
50:49China, Japan and South Korea are in an agreement to fight Trump's tariffs together.
50:54All three countries are hit hard by Wednesday's announcement.
51:01The U.S. side, under the guise of reciprocity,
51:05imposed tariffs on products from many countries, including China. This seriously violates WTO
51:11rules and severely damages the rules-based multilateral trading system. China firmly
51:17opposes this and will take necessary measures to resolutely safeguard its legitimate interests.
51:25Japan has repeatedly explained its concerns at various levels and has urged that unilateral
51:34tariff measures should not be taken. Despite this, the U.S. government has announced
51:40comprehensive tariff measures, which is extremely regrettable. We have serious
51:45concerns regarding the compatibility of the WTO agreement and the Japan-U.S. trade agreement.
51:54The U.S. president has slapped all member countries of the European Union with a 20%
52:00reciprocal tariff. No one is happy about it.
52:07The U.S. government is therefore treading a path that will only end up with losers.
52:11The European Union has the strongest single internal market in the world
52:16with 450 million consumers, and that gives us strength. We are available for talks with the
52:22U.S. government to avert a trade war, and the president of the Commission has already
52:27made this clear. Germany and Europe continue to stand for free trade. We are focusing on
52:33cooperation, not confrontation, and we will defend our interests. Europe will respond
52:38to the U.S. decision in a united, strong and appropriate manner.
52:44While most countries are hit hard, ranging between 10% to as high as 50%
52:49reciprocal tariff by the U.S. president, countries like Russia, Canada, Mexico,
52:54North Korea and Cuba were left out of the list.
52:59The fact that Canada and Mexico weren't included in Trump's 2nd April tariff announcement
53:04does not mean they have escaped trade penalties altogether. The U.S. had already imposed a 25%
53:11tariff on imports from both countries earlier this year, with a lower 10% rate on Canadian
53:16energy and potash. Additionally, goods entering the U.S. under the U.S.-Mexico-Canada agreement
53:22remain exempt from these new duties, but auto parts and other products will face new levies
53:28starting Thursday. Bureau report, India Today.
53:36And there have also been some unintended and some rather strange outcomes from U.S.
53:42President Donald Trump's sweeping tariff impositions. Norfolk Islands, for example,
53:47off the coast of Australia, the population only 2,000. They've been hit with 29% tariffs. And
53:56her and McDonald's islands, now that's home to penguins,
54:00they've been imposed with 10% tariffs. Why? No one knows.
54:04These are the satellite images of an unheard island in the Antarctica,
54:15the herd and the McDonald's islands. It is a part of Australia and no one lives here,
54:21but it is caught up alongside global heavyweights in the U.S. President Donald Trump's sweeping
54:27tariff regime. Herd and McDonald's islands with no human population faces 10% tariff
54:34for exports to the U.S. Norfolk Island, another tiny Australian territory, 966 kilometers off the
54:46mainland's eastern coast, now faces a hefty 29% U.S. tariff on exports. The rugged volcanic island
54:55in the Southern Pacific does ship a modest amount of Kentia palm seeds abroad worth less
55:00than $1 million a year, and that too mostly to Europe. Norfolk Island, interestingly, is I think
55:1129%. I'm not sure what Norfolk Island major exports are to the United States and why it's
55:22singled out, but it has. With 2,188 residents, Norfolk is amused by the tariff strike.
55:29The U.S. government data has recorded trade deficits with Norfolk Island for the past three
55:35years. The island exported $200,000 to a maximum of $700,000 in these three years,
55:43while its imports from the U.S. stayed at $100,000 in those years. Bureau report India Today.