Modi & Trump giving their economies self-inflicted wounds: Jairam
The global markets have been sent into a tailspin after the White House announced a slew of tariffs on Chinese goods, sparking a wave of panic among investors and economists alike. The news sent shockwaves across the globe, with many economies feeling the heat. And in the midst of all this chaos, Congress leader Jairam Ramesh has come down heavily on Prime Minister Narendra Modi and US President Donald Trump, saying they are experts in giving their economies self-inflicted wounds.
In a scathing tweet, Jairam Ramesh said, “It’s no wonder that Mr. Modi and Mr. Trump describe themselves as good friends. Both are experts in giving their economies self-inflicted wounds.” His comment came after the Sensex opened over 3,900 points lower, while Nifty opened over 1,000 points below.
Ramesh’s comments are not without merit. Both Modi and Trump have been known for their protectionist policies, which have been widely criticized by economists and experts. Trump, in particular, has been accused of using tariffs as a tool to punish other countries, rather than to protect American industries. His “America First” policy has led to a trade war with several countries, including China, which has resulted in retaliatory tariffs and a sharp decline in global trade.
Similarly, Modi’s government has been accused of being overly reliant on protectionism, with many economists warning that it will harm the Indian economy in the long run. India’s trade deficit has been rising steadily under Modi’s watch, and the country’s exports have been declining. The government’s decision to impose tariffs on several goods, including those from the US, has also sparked concerns about a trade war.
The impact of these policies can be seen in the global markets. The Dow Jones Industrial Average fell over 700 points, while the S&P 500 index dropped over 2.5%. The Nikkei 225 index in Japan fell over 4.5%, while the Shanghai Composite Index in China dropped over 5.5%. The impact has been felt across the globe, with many markets experiencing their worst day in months.
But why are these policies so harmful? The answer lies in the concept of comparative advantage. According to this theory, countries should specialize in producing goods and services in which they have a comparative advantage, and trade with other countries to get the goods and services they need. This leads to increased efficiency, lower prices, and higher economic growth.
Protectionism, on the other hand, can lead to a number of negative consequences. It can lead to increased costs, reduced competition, and a decline in innovation. It can also lead to a decline in trade, which can have far-reaching consequences for the economy.
In the case of India, the impact of protectionism can be seen in the decline of its exports. India’s exports have been declining steadily since 2018, and the country’s trade deficit has been rising. The government’s decision to impose tariffs on several goods, including those from the US, has also sparked concerns about a trade war.
Similarly, the impact of Trump’s tariffs can be seen in the decline of global trade. The US is a major player in global trade, and its tariffs have had a significant impact on other countries. The EU, Japan, and other countries have all imposed retaliatory tariffs on US goods, leading to a decline in global trade.
So, what can be done to prevent these self-inflicted wounds? The answer lies in adopting a more nuanced approach to trade policy. Instead of relying on tariffs and protectionism, governments should focus on promoting free trade and increasing economic cooperation.
In the case of India, this could involve reducing tariffs and non-tariff barriers, and promoting trade agreements with other countries. The government could also focus on improving the business environment, increasing investments in infrastructure, and promoting innovation.
Similarly, the US could focus on promoting free trade and increasing economic cooperation with other countries. This could involve reducing tariffs and non-tariff barriers, and promoting trade agreements with other countries. The government could also focus on improving the business environment, increasing investments in infrastructure, and promoting innovation.
In conclusion, Jairam Ramesh’s comments are a timely reminder of the dangers of protectionism and the importance of promoting free trade and economic cooperation. Both Modi and Trump have been accused of giving their economies self-inflicted wounds, and it is time for them to rethink their policies and adopt a more nuanced approach to trade.
Source: https://x.com/Jairam_Ramesh/status/1909116322992009326
