Over the past couple of centuries, role of international trade in determining a country’s greatness has grown tremendously. It intensified particularly through the second wave of globalisation under the U.S. leadership post World War II. The U.S. has seeded and empowered the voices of free and open markets through Bretton Woods institutions, implementation of General Agreement on Tariffs and Trade and the World Trade Organisation. This resulted in creation of an ecosystem wherein economies, societies and markets interact, integrate and remain interdependent. 
 
However times have changed and today we face a scenario where U.S. President Donald Trump vehemently asserts that ‘’trade wars are good and easy to win’. Such a proposition from the President that represents a country that created rules based and liberal economic order is dangerous. It can result in a negative effect on U.S. businesses, markets and consumers who thrive on free markets philosophy and also damage the liberal values that Americans have persevered over a long period. 
 
In fact, in the recent past the Lowy Institute of Australia has looked at factors including trade in determining a country's "power" and found some significant changes in "power gaps" between the U.S. and China in particular.  In essence, it indicates that if U.S. (for that matter any country) ignores "trade" as one of the important pillars of their foreign policy relations then it will be at its own peril.
 
‘’Tit-for-tat’’ tariffs have mostly exacerbated the interests of American businesses, consumers and its partners. In our recent column: "Trump Must Avoid Trade Wars to Make America Great Again”, we have argued as to why President Trump must reflect that America has been great before and can continue to be so by preventing further trade skirmishes and safeguarding economic interests of American businesses and consumers including that of its partners.
 
There has to be an alternative approach. For example, India has trade concerns with China and so does President Trump. But is our objective to reform and improve China? Or, is it about destroying them? While the Europeans are following the former (and so are the Japanese, the Koreans and the ASEAN countries), President Trump is hell bent on the latter. Thus, India would need to engage with the Europeans and ASEAN+ to reform and improve China as otherwise "destroying" strategy will be hugely counter-productive for all of us.

  P.S.  U.S has ended waiver on Iranian oil to India and has asked India  not to buy oil from Iran or face strict measures. How fair is it?

 

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