Q. What are trade tariffs and why are they imposed? Discuss the global regulatory mechanisms and analyse the implications of recent tariff changes by the U.S. under former President Donald Trump.

Introduction
Trade tariffs are taxes imposed by a country on the import or export of goods. They serve as tools for economic protectionism, revenue generation, or strategic retaliation. Tariffs directly affect international trade by making imported goods more expensive, thereby promoting domestic industries.

Why are Trade Tariffs Imposed?

• Protect domestic industries from cheaper foreign competition
• Generate government revenue, especially for developing economies
• Correct trade imbalances by discouraging excessive imports
• Retaliatory measure in response to unfair trade practices
• Safeguard national security in sensitive sectors like defence and technology

Global Regulatory Framework

• The World Trade Organization (WTO) oversees global trade norms
• Enforces Most-Favoured-Nation (MFN) treatment and tariff bindings
• Operates a Trade Policy Review Mechanism (TPRM) to ensure transparency and compliance
• Regional trade blocs like ASEAN or the European Union may also govern tariffs within their member states

Recent Developments – U.S. under Donald Trump

• In 2024, the Trump administration imposed 25% tariffs on imported vehicles
• Targeted countries include Germany, Japan, South Korea, Mexico, and Canada
• The move was justified as protecting national security and saving U.S. auto industry jobs
• Met with backlash from U.S. allies and triggered fears of a global trade war
• In India, the issue sparked debates over strategic preparedness and trade response

Implications for India and the World

• Undermines global free trade norms and creates policy uncertainty
• May lead to retaliatory tariffs, hurting global supply chains and trade volumes
• India must focus on trade diversification, strengthen bilateral trade agreements, and balance protectionism with openness

Conclusion
Tariffs, while a valid policy tool, must be used judiciously. The recent U.S. tariff hike signals a shift from multilateralism. India must tread cautiously, upholding WTO commitments while defending national interests in the evolving global order.

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