Global trade realigns as Trump tariffs spur FTA Ppush

With US President Donald Trump having set off a tariff war and destabilised the trade scenario, nations are scrambling to diversify their trading options by striking deals between themselves even as the deadline for the new tariffs to kick in approaches. India, for instance, though it expects to secure some concessions from its main trading partner the US, is leaving nothing to chance, given Trump’s notorious fickleness. It has already entered into Free Trade Agreements (FTAs) with several countries and blocs, including Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, South Korea, Japan, Australia, UAE, Mauritius, the ASEAN bloc, and the EFTA bloc (Iceland, Liechtenstein, Norway, and Switzerland). India is also actively negotiating FTAs with the US after it has succeeded in forging one with the UK.

At the same time, it is also negotiating with the EU, with External Affairs Minister S Jaishankar holding a series of meetings with top European leaders at Brussels to discuss ways to further strengthen the EU-India strategic partnership through a comprehensive and meaningful trade agreement. Apart from European Parliament President Roberta Metsola and European Commissioner for Trade and Economic Security Maros Sefcovic, the Indian Minister also interacted with the European Commissioner for International Partnerships Jozef Sikela, European Commission President Ursula von der Leyen, etc. Reportedly, it was a highly successful essay, and a fair and comprehensive trade deal with the EU is on the cards.

The possibility of the turbulence caused by Trump’s tariff announcement subsiding has increased due to the resolution of the biggest bugbear confronting international trade – the deal arrived at between China and the US. It was reached after Trump and China’s President Xi Jinping spoke on the telephone, and brought about a truce in a trade war between the world’s two largest economies. Before the telephonic interaction, talks between the two nations at Geneva had faltered over China’s continued curbs on minerals exports, prompting the Trump administration to respond with export controls preventing shipments of semiconductor design software, jet engines and other goods to China.

Fortunately, such contentious issues, which had the potential to continue to disrupt global trading stability, were amicably thrashed out and a deal arrived at, which pegged US tariffs on Chinese goods at 55% and Chinese tariffs on American goods at 10%. If nothing else, the threat of Trump’s tariffs had at least galvanised the international community to explore options other than the US market, thereby bringing about tangible changes to the global trade profiles and patterns. It may be noted that in recent times major financial institutions had painted a rosier picture of India’s economic future as compared to many other countries in the world. Major disruptions to global trade had been cited by these institutions to be the only hurdle to the projected growth, a danger that the country now seems to have sidestepped.