Trump’s Tariff War: An Opportunity for the Global South

UPSC Relevance GS Paper 2 (IR): India-U.S. relations, multipolarity, Global South diplomacy. GS Paper 3 (Economy): Trade policy, tariff impacts, manufacturing growth. Essay/Optional: Topics on globalisation, protectionism, and equitable development.

Why in News

The return of Donald Trump to the White House has re-ignited the tariff wars and economic disruptions across the globe. While this has unsettled global trade flows, it also opens up a strategic opportunity for India and the Global South to recalibrate their positions in the evolving world order.

Background

Tariffs have historically been used as a tool of economic coercion and protectionism. The U.S. under Trump (2017–2021) had already imposed tariffs on steel, aluminium, and Chinese imports. His new phase of tariff war (2025 onwards) reflects not only protectionism but also a larger attempt to reshape global supply chains, check China’s rise, and strengthen U.S. domestic politics.

For the Global South, which already bears the brunt of inequities in globalisation — ranging from debt burdens, weak institutions, and export dependence — this churn provides both risks and opportunities to push for a more equitable multipolar order.

Trump’s Motivations Behind Tariff War

1. Domestic Politics and Populism
2. Tariffs appeal to America’s “silent majority” who feel left out by globalization.
3. Example: Trump’s push to protect U.S. manufacturing workers by targeting foreign goods.
4. Economic Power and Protectionism
5. The U.S. seeks to maintain its economic primacy against the rising China.
6. Example: While the U.S. has tariffs up to 350% on tobacco, 200% on dairy, and 120% on fruits, it pressures India to open its agriculture sector.
7. Geopolitical Strategy
8. Tariffs are also linked to foreign policy goals, e.g., penalising India to pressure Russia during the Ukraine war, while sparing China due to its monopoly over rare earth metals critical for U.S. defence and technology.

Implications for India and the Global South

1. Trade Disruptions
   Indian exports like textiles, auto components, jewellery, and metals face higher U.S. tariff barriers.Example: In 2023, India’s exports to the U.S. were valued at $77 billion, making it highly vulnerable.
   
2. Geopolitical Realignment
   U.S. sanctions and tariffs push Global South nations closer to each other and to alternative groupings like BRICS+ and SCO.
   
3. Supply Chain Diversification
   Rising tariffs on China create opportunities for India, Vietnam, and Mexico to absorb relocated industries.Example: Mexico’s exports to the U.S. surged during the U.S.-China trade war (2018–19).
   
4. Challenge to Liberal World Order
   Tariffs weaken the WTO system and multilateralism, making collective South-South cooperation more urgent.

What India Must Do 1. Strategic Autonomy Reassess over-dependence on the U.S. as a “China counterweight. ”Maintain multi-alignment — balancing ties with the U.S., Russia, China, and the Global South. 2. Economic Resilience Revive manufacturing (currently at 4-decade low), boost private investment, and modernise PSUs like China’s SOEs. Enhance research & innovation spending to compete in the global tech race. 3. Assertive Diplomacy Confront tariff pressures firmly instead of conceding. Example: China resisted U.S. trade pressure by leveraging rare earth mineral exports critical for U.S. defense industries. 4. Domestic Consensus Build bipartisan agreement on foreign policy and economic reforms. Example: Non-Alignment 2.0 (multi-alignment) can act as a guiding framework.

Challenges Before India and the Global South

1. Fragmentation Within the Global South
   Competing interests among nations limit collective bargaining.
   Example: ASEAN members differ on aligning with China or the U.S.
2. Dependence on Western Markets
   Most Global South exports still go to the U.S. and EU.Example: India sends nearly 18% of its exports to the U.S.
3. Weak Institutional Capacity
   Unlike the EU or G7, institutions such as SAARC or African Union lack economic clout.
4. Economic Vulnerabilities
   Manufacturing share in India’s GDP is stuck at 15–16%, far below China’s 27–28%.
5. Geopolitical PressuresBalancing ties between rival powers is tricky.
   Example: India cannot afford to sever trade with China (bilateral trade $136 billion in 2023) despite border tensions.
6. Domestic Policy Gaps
   India spends only 0.7% of GDP on R&D compared to China’s 2.4%, limiting competitiveness.

Way Forward

1. Champion Multipolarity
   India must push for multi-alignment instead of unipolar dependency. Platforms like BRICS+, SCO, and G20 should be leveraged to represent Global South concerns.
2. Resilient Domestic EconomyStrengthen manufacturing, invest in R&D, and boost exports under “Make in India 2.0”.
   Example: India should replicate China’s use of State-Owned Enterprises strategically.
   
   
3. Assertive Trade DiplomacyConfront U.S. policies more firmly rather than conceding, as seen in stopping Iranian oil imports under U.S. pressure.
   
   
4. South-South Cooperation
   Build stronger coalitions across Africa, Latin America, and Asia for a New Economic Deal focusing on debt relief, equitable trade, and sustainable development.
   
   
5. Strategic Autonomy-Avoid over-dependence on the U.S. or China. Prioritise energy diversification (Iran, Venezuela), rare earth collaborations (Australia, Africa), and digital sovereignty.

Conclusion

Trump’s tariff war may appear to destabilise global trade, but it also opens a window for India and the Global South to reshape the economic order. By strengthening internal capacities, asserting multipolar leadership, and forging South-South solidarity, India can turn these disruptions into an opportunity. The key lies in moving beyond symbolic diplomacy towards substantive economic and strategic reforms.

UPSC Mains-practice questions

Q1,Protectionism is resurging globally in the form of tariff wars. Analyse its implications for India’s trade, manufacturing sector, and global supply chains. (250 words)
Q2.“The Global South must turn disruption into opportunity.” Evaluate this statement in the context of the U.S. tariff war and India’s trade policy reforms. (250 words)

Note- also read articles of –1st August Trade Tensions Escalate: India-U.S. Tariff Dispute and Its Strategic Fallout and 20th of August How India’s Youth Can Challenge U.S. Tariffs for holistic coverage

SOURCE- THE HINDU

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