1. Impact on India: Trade Barriers Reversed

1. Loss of GSP Benefits – The US withdrew India’s Generalized System of Preferences (GSP) status, affecting $5.6 billion worth of exports.
2. Higher Tariffs on Indian Goods – The US imposed higher tariffs on Indian steel, aluminum, and other products, impacting industries.
3. India’s Counter-Tariffs – India retaliated with increased tariffs on US agricultural and industrial imports, reducing trade imbalance.
4. Shift Toward European and Asian Markets – India expanded trade agreements with the European Union (EU) and ASEAN to reduce dependence on the US.
5. Focus on Self-Reliance – The Indian government launched “Atmanirbhar Bharat” to boost domestic production and minimize trade risks.

2. China’s Response: Push for Consumption

1. Reducing US Trade Dependence – China lowered reliance on the US market by expanding trade ties with the EU, ASEAN, and African nations.
2. Domestic Demand Growth – China focused on increasing domestic consumption to sustain its economic growth amid trade tensions.
3. Currency and Monetary Policy Adjustments – To counteract tariff effects, China devalued the yuan to make exports competitive.
4. Expansion of the Belt and Road Initiative (BRI) – China accelerated BRI investments in Asia, Africa, and Europe to offset US market losses.
5. Technological Self-Reliance – China invested heavily in semiconductor and AI industries to reduce dependency on US technology firms.

3. Impact on Europe: Re-arming and Spending

1. Increased Defense Spending – European nations boosted military budgets to reduce dependency on US security guarantees.
2. Strengthening Internal Trade Agreements – The EU enhanced intra-European trade and investment mechanisms to stabilize its economy.
3. Diversification of Energy Sources – To counter energy security concerns, Europe invested in alternative energy partnerships outside US influence.
4. Closer Economic Ties with Asia – The EU deepened trade relations with China, India, and Japan to balance losses from US policies.
5. Re-evaluation of Dollar Dependence – European countries considered reducing reliance on the US dollar in global trade transactions.

4. Impact on the US: Not So Great Again?

1. Higher Inflation – US consumers faced increased costs due to higher tariffs on imported goods.
2. Weakening of US Dollar Dominance – Countries started reducing US dollar reliance, shifting trade settlements to other currencies.
3. Increased Manufacturing Costs – American companies faced higher production costs, making exports less competitive globally.
4. Strained Trade Relations – The US lost goodwill with major economies, making future trade negotiations more difficult.
5. Economic Slowdown and Stock Market Uncertainty – US markets faced uncertainty due to retaliatory tariffs and reduced global confidence.

5. Way Forward for India

1. Strengthening Trade Ties with New Partners – Expand exports and trade agreements with EU, ASEAN, and Latin America.
2. Boosting Domestic Manufacturing – Promote Make in India & Atmanirbhar Bharat to reduce dependency on global markets.
3. Leveraging Global Supply Chain Disruptions – Attract multinational companies shifting away from China due to the US-China trade war.
4. Enhancing Export Competitiveness – Reduce trade barriers, improve infrastructure, and invest in skill development to boost exports.
5. Promoting Regional Cooperation – Strengthen economic ties through SAARC, BIMSTEC, and Indo-Pacific trade initiatives.

Conclusion

• The MAGA policy disrupted global trade, but India has turned challenges into opportunities by diversifying trade partners and enhancing self-reliance.
• A strategic mix of diplomatic, economic, and trade policies will strengthen India’s position in global trade while minimizing risks from US policies.