The wider implications of Trump’s economic and trade policies
(Source – The Hindu, International Edition – Page No. – 13)
| Topic: GS2 – International Relations |
| Context |
|
Implications of US President Donald Trump’s Economic and Tariff Policies
- Global Supply Chain Disruptions – Increased tariffs disrupt established supply chains, affecting manufacturers and raising production costs.
- Market and Currency Volatility – Trade wars lead to fluctuations in global stock markets and depreciation of national currencies.
- Inflationary Pressures – Higher import duties increase the cost of goods, leading to inflation in both the US and global markets.
- Decline in Global Trade – Protectionist policies discourage international trade, slowing global economic growth.
- Impact on Developing Nations – Emerging economies relying on exports, such as mono-crop agricultural nations, face economic hardship.
- Retaliatory Measures – Other countries impose counter-tariffs, escalating trade tensions.
- Impact on Businesses – Companies face uncertainty, leading to reduced investments and job losses.
Way Forward
- Negotiated Trade Agreements – Encourage diplomatic trade talks to balance economic interests.
- Strengthening WTO Mechanisms – Reinforce multilateral institutions to ensure fair trade policies.
- Diversifying Export Markets – Countries should explore alternative markets to reduce dependency.
- Encouraging Domestic Manufacturing – Nations should invest in self-sufficiency and local production.
- Reducing Trade Barriers Gradually – Phased tariff reductions can prevent economic shocks.
- Strengthening Regional Cooperation – Countries should enhance regional trade partnerships to mitigate external disruptions.
| PYQ: “The broader aims and objectives of WTO are to manage and promote international trade in the era of globalization. But the Doha round of negotiations seem doomed due to differences between the developed and the developing countries.” Discuss in the Indian perspective. (200 words/12.5m) (UPSC CSE (M) GS-2 2016) |
| Practice Question: Discuss the impact of protectionist trade policies on global supply chains and economic growth. Suggest measures to mitigate their adverse effects. (150 Words /10 marks) |
