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Trump’s Tariffs: 100,000s Jobs Lost, Negative Impact on GDP – No Doubt About That – Biswajit Dhar

Trump's tariffs: 100,000s jobs lost, negative impact on GDP - no doubt about that: Prof. Biswajit Dhar, Distinguished Professor, Council for Social Development, to Karan Thapar for The Wire. .......................................... In a 30-minute interview to Karan Thapar for The Wire, Prof. Dhar, a former Professor at Jawaharlal Nehru University and now a Distinguished Professor at the Council for Social Development, said that the impact of Trump’s tariffs on Indian exports to America such as gems and jewelry, engineering goods, electronics, readymade garments and some agricultural produce would be a loss of hundreds of thousands of jobs and the impact on GDP would be negative. Though Prof. Dhar was reluctant to quantify the negative impact on GDP growth he added “there is no doubt about that”. One of India’s foremost experts on trade, Prof. Dhar also said that the belief that the total quantum of Trump’s tariffs on India is 27% is a misreading of the American text and it is, in fact, 37% i.e. 10% plus 27% not 10% rising to 27%. Prof. Biswajit Dhar was repeatedly questioned about this and on every occasion responded by saying he was completely confident he was correct. Prof. Dhar said there would be a negative impact on investments in India, both domestic and in terms of FDI, because of the increased international economic uncertainty. He believes America is likely to slide towards a situation approximating stagflation by autumn or end of this year and that, again, would have an adverse impact on India’s growth. In the interview, Prof. Dhar forcefully argued against claims made by think-tanks like Global Trade Research Initiative that, because tariffs imposed on India are significantly lower than those on countries like China, Vietnam, Bangladesh, Thailand and Indonesia, India had a comparative advantage in areas like electronics, textiles and smartphones and investments could move to India. He said this is extremely unlikely for two reasons. First, to take textiles and readymade garments as an example, these are made in the micro sector which does not have the capacity to ramp up sizably or quickly. Second, Bangladesh, a major exporter of readymade garments to the West, has been in turmoil for almost a year but India has not been able to replace Bangladeshi exports during this time. It’s unlikely it will be able to do so now. Prof. Dhar was also sharply critical of India’s hopes and tactics at the bilateral trade agreement negotiations between India and America. He believes that India is unlikely to be able to reduce America’s tariffs by offering concessions. Instead, he says, Trump will use his tariffs to force India to make concessions without lowering his tariffs. In other words, he says, India could lose on two fronts – its exports to America could shrink as well as its imports from America could increase. I will stop there. I have given you some of the main headline points made by Prof. Dhar. Now, to help you, I will give you the questions asked to him. Here they are:- 1) Before we focus on what Trump’s reciprocal tariffs mean for India let’s start with Trump and America. Calling his measures “a Declaration of Economic Independence”, Trump said he was acting because “For decades our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike”. Does that explanation hold water and justify what he’s done? 2) Secondly, there’s lack of clarity about the exact quantum of what he’s done. Is it a universal baseline 10% levy imposed on the 5th of April and then increased by reciprocal tariffs on the 9th or replaced by reciprocal tariffs? In other words, in India’s case, is it 10% plus 27% or 10% rising to 27%? 3) What sort of impact will this have within America? Do you envisage a sharp increase in inflation? 4) Secondly, JP Morgan as well as BBC commentators believe America will tip into recession by autumn or end of the year. Do you agree with that view? 5) Let’s come to the impact on India. Trump says that he’s calculated the 27% reciprocal tariff on the grounds that India imposes a 52% tariff on America which he says is inclusive of currency manipulation and trade barriers. How legitimate or arbitrary is that calculation? 6) The most immediately affected will be India’s goods exports to the United States which are worth some $85 billion. CNBC says there could be a 10-15% impact on this. That’s a hit somewhere between $8 billion and $13 billion. Do you agree? Join The Wire's Youtube Membership and get exclusive content, member-only emojis, live interaction with The Wire's founders, editors and reporters and much more. Memberships to The Wire Crew start at Rs 89/month.    / @thewirenews