Washington, D.C.: President Donald Trump, on taking office, announced that the United States will henceforth be regarded as a “developing country,” one he promised to make rich. So, his pre-poned and to-the-point announcement of the ‘Make in America’ program speaks volumes about his firmness of purpose. This move casts aspersions on whether it would exclusively have an effect on China or if it would entail roadblocks in the ‘Make in India’ policy of India.
Trump urged the world’s business elite on Thursday to produce their goods in the United States. He was unequivocal: Companies should either produce their products in America or expect to pay higher taxes or duties.
And when Trump was in his first term, he fought a trade war with China that lasted until just before the COVID-19 pandemic started. Their trade and tariff war caused a fallout in global trade. And with Trump back in the White House, he’s already declared measures to reduce China’s role in the Panama Canal, suggesting US-China relations may not improve in the coming days.
Trump also hinted that heavy tariffs could be applied to other major trading partners, including Canada, Mexico, and China, within less than a month; on Feb. 1, he wrote in his inaugural speech. It is important to note that India does not feature on this list for now. Trump has also removed the US from the Paris Climate Agreement and the World Health Organisation.
Trump did not name India in his list of countries against which tariffs were being hiked, but his comments at the World Economic Forum in Davos could spell trouble for India. Trump said, “Make your products in America, and we will give you the lowest taxes anywhere on Earth. If you don’t make it in America, which is your choice, you will generally have to pay higher taxes.”
With major companies diversifying their supply chains away from China during the COVID-19 pandemic, India has pushed its ‘Make in India’ program, rolling out the Production Linked Incentive (PLI) scheme to woo the businesses.
For India, it may be to challenge Trump’s promise of the lowest taxes. Trump had also previously voiced unhappiness about India’s policy on import duties, notably for Harley-Davidson motorcycles, during his first term.
Trump has stressed the need to increase demand to rescue the beleaguered US economy, which is weighed down by debt. He has urged the Federal Reserve to slash interest rates right away. Such an outcome would majorly impact global stock markets, the economies of the nations and regional economies, as well as global inflation.