Trump Tariffs: US President Donald Trump has unleashed a fresh reciprocal tariffs, setting off alarms for global trade war. Swaminathan Aiyar, economist and consulting editor at ET Now, said the measures, announced on what Trump called “Liberation Day,” should have instead been described as “Recession Day,” with concerns that they will disrupt supply chains, hurt economic growth, and push the world economy into turmoil.
"He called it Liberation Day. I think you better call it Recession Day or Stagflation Day," Aiyar told ET Now.
Aiyar described the new tariffs as “economic insanity in spades”, comparing them to the protectionist Smooth-Hawley tariffs of the 1930s that exacerbated the Great Depression. “This is the kind of lesson taught in college to undergraduates. It appears to not hold sway with Mr Trump and his entire Council of Economic Ministers,” Aiyar said. He warned that the tariffs would lead to retaliation, further trade wars, and a global slump.
Under Trump’s new policy, tariffs on India’s exports to the US will rise to 26%. China faces a 34% tariff , pushing average US duties on Chinese imports to as high as 65%, according to economists. Vietnam will see the highest impact with a 46% tariff, while the European Union will face a 20% levy. Other affected countries include South Korea (25%), Japan (24%), Taiwan (32%), and the United Kingdom (10%). Switzerland and Brazil will each face a 34% and 10% tariff, respectively. Additionally, the US will introduce a 10% base interest on all imports, though further details on this are yet to be provided.
Also Read: Trump’s tariff bombshell hits India, but some desi sectors dodge the shrapnel
Aiyar dismissed Trump’s claim that these tariffs would make America a great manufacturing power, calling it “a disaster” and arguing that they would cause economic dislocation rather than revival. “He is going back to Mr President McKinley of 1896. All I can say is, sir, please do not get hung up on 1896. Look at 1930 and the Smooth-Hawley things which ruined your country and ruined the world,” he said.
The tariffs come as the global economy is already facing challenges, with many experts warning of a slowdown. Aiyar predicted “World GDP will slump, Indian GDP will slump, American GDP will slump.” He pointed out that the new duties would force manufacturers to rethink their entire production and export strategies. “There will be all kinds of factories and places which can no longer export,” he said, citing Apple’s large manufacturing plant in India, which exports to the US, as an example.
"Look at Apple. It has this large plant in India exporting to the USA. Will it be able to export with a high import tariff that they are now going to levy upon us? It will be very difficult," he said.
"The smaller picture is what happens to Apple, what happens to pharma, what happens to individual stocks. The main thing is that this is ruinous news for India, for the USA, and for the world economy. We are going into a recession," Aiyar added.
Trump's decision to impose reciprocal tariffs is expected to slow global trade significantly, according to a report by HSBC Research. The report predicts that world export growth will drop from 2.9% in 2024 to 1.3% in 2025-26, mainly due to weaker demand in the US and uncertainty affecting global investment and confidence.
While some analysts argue that India may be in a relatively better position than other Asian economies, Aiyar dismissed such optimism. “You can say that in the ongoing tragedy, there was a supporting actor who did not do as badly,” he remarked. He acknowledged that China, Japan, and Korea may be hit harder, but insisted that India would still suffer significant economic pain.
Also Read: Trump's 26% tariffs put pressure on India. Is New Delhi ready for the impact?
The PHD Chamber of Commerce and Industry estimates that India’s GDP will take only a 0.1% hit in the short term, citing strong domestic manufacturing and supportive government policies such as the production-linked incentive (PLI) scheme, Make in India, and Atmanirbhar Bharat.
Industry body ASSOCHAM also downplayed the damage, with its president Sanjay Nayar stating that “India is not badly impacted” because its economy is more inward-looking than other Asian markets.
Meanwhile, Bernstein analysts suggested that India is likely to navigate the situation through negotiations rather than escalation. Though markets may react negatively in the short term, they expect a recovery in the second half of the year.
Some believe the tariffs could open new opportunities for India. Ajay Srivastava, founder of GTRI, pointed out that Trump's decision to impose higher duties on several Asian and European countries, including China and Vietnam, might allow India to strengthen its position in global trade and manufacturing.
Also Read: What are Trump's new reciprocal tariffs and how will they impact trade?
However, Aiyar said, “At the end of it all, you are going to be badly hit,” adding that uncertainty over American trade policy could deter foreign manufacturers from investing in India’s export-oriented capacity. He also raised concerns about how the tariffs would affect India’s ambitious PLI scheme, questioning whether companies like Apple might reconsider their plans in the country.
Beyond India, the broader economic impact is likely to be severe. Aiyar warned that the tariffs, coupled with a 10% flat import duty, could act as a “10% devaluation in terms of the currency” for the US. He argued that while Trump believes this will help American industry, the actual outcome will be increased inflation and economic stagnation. “This is going to lead to more inflation with a recession, stagflation,” he said.
Trump, however, remains defiant, telling Americans that “we must all be prepared for a little pain” before the US regains its manufacturing strength. Aiyar countered that the pain would be far more severe than Trump suggests. “There will be more than a little pain. There will be a lot of pain. And afterwards, this will be remembered as a day of economic insanity.”
"He called it Liberation Day. I think you better call it Recession Day or Stagflation Day," Aiyar told ET Now.
Aiyar described the new tariffs as “economic insanity in spades”, comparing them to the protectionist Smooth-Hawley tariffs of the 1930s that exacerbated the Great Depression. “This is the kind of lesson taught in college to undergraduates. It appears to not hold sway with Mr Trump and his entire Council of Economic Ministers,” Aiyar said. He warned that the tariffs would lead to retaliation, further trade wars, and a global slump.
Under Trump’s new policy, tariffs on India’s exports to the US will rise to 26%. China faces a 34% tariff , pushing average US duties on Chinese imports to as high as 65%, according to economists. Vietnam will see the highest impact with a 46% tariff, while the European Union will face a 20% levy. Other affected countries include South Korea (25%), Japan (24%), Taiwan (32%), and the United Kingdom (10%). Switzerland and Brazil will each face a 34% and 10% tariff, respectively. Additionally, the US will introduce a 10% base interest on all imports, though further details on this are yet to be provided.
Also Read: Trump’s tariff bombshell hits India, but some desi sectors dodge the shrapnel
Aiyar dismissed Trump’s claim that these tariffs would make America a great manufacturing power, calling it “a disaster” and arguing that they would cause economic dislocation rather than revival. “He is going back to Mr President McKinley of 1896. All I can say is, sir, please do not get hung up on 1896. Look at 1930 and the Smooth-Hawley things which ruined your country and ruined the world,” he said.
The tariffs come as the global economy is already facing challenges, with many experts warning of a slowdown. Aiyar predicted “World GDP will slump, Indian GDP will slump, American GDP will slump.” He pointed out that the new duties would force manufacturers to rethink their entire production and export strategies. “There will be all kinds of factories and places which can no longer export,” he said, citing Apple’s large manufacturing plant in India, which exports to the US, as an example.
"Look at Apple. It has this large plant in India exporting to the USA. Will it be able to export with a high import tariff that they are now going to levy upon us? It will be very difficult," he said.
"The smaller picture is what happens to Apple, what happens to pharma, what happens to individual stocks. The main thing is that this is ruinous news for India, for the USA, and for the world economy. We are going into a recession," Aiyar added.
Trump's decision to impose reciprocal tariffs is expected to slow global trade significantly, according to a report by HSBC Research. The report predicts that world export growth will drop from 2.9% in 2024 to 1.3% in 2025-26, mainly due to weaker demand in the US and uncertainty affecting global investment and confidence.
While some analysts argue that India may be in a relatively better position than other Asian economies, Aiyar dismissed such optimism. “You can say that in the ongoing tragedy, there was a supporting actor who did not do as badly,” he remarked. He acknowledged that China, Japan, and Korea may be hit harder, but insisted that India would still suffer significant economic pain.
Also Read: Trump's 26% tariffs put pressure on India. Is New Delhi ready for the impact?
The PHD Chamber of Commerce and Industry estimates that India’s GDP will take only a 0.1% hit in the short term, citing strong domestic manufacturing and supportive government policies such as the production-linked incentive (PLI) scheme, Make in India, and Atmanirbhar Bharat.
Industry body ASSOCHAM also downplayed the damage, with its president Sanjay Nayar stating that “India is not badly impacted” because its economy is more inward-looking than other Asian markets.
Meanwhile, Bernstein analysts suggested that India is likely to navigate the situation through negotiations rather than escalation. Though markets may react negatively in the short term, they expect a recovery in the second half of the year.
Some believe the tariffs could open new opportunities for India. Ajay Srivastava, founder of GTRI, pointed out that Trump's decision to impose higher duties on several Asian and European countries, including China and Vietnam, might allow India to strengthen its position in global trade and manufacturing.
Also Read: What are Trump's new reciprocal tariffs and how will they impact trade?
However, Aiyar said, “At the end of it all, you are going to be badly hit,” adding that uncertainty over American trade policy could deter foreign manufacturers from investing in India’s export-oriented capacity. He also raised concerns about how the tariffs would affect India’s ambitious PLI scheme, questioning whether companies like Apple might reconsider their plans in the country.
Beyond India, the broader economic impact is likely to be severe. Aiyar warned that the tariffs, coupled with a 10% flat import duty, could act as a “10% devaluation in terms of the currency” for the US. He argued that while Trump believes this will help American industry, the actual outcome will be increased inflation and economic stagnation. “This is going to lead to more inflation with a recession, stagflation,” he said.
Trump, however, remains defiant, telling Americans that “we must all be prepared for a little pain” before the US regains its manufacturing strength. Aiyar countered that the pain would be far more severe than Trump suggests. “There will be more than a little pain. There will be a lot of pain. And afterwards, this will be remembered as a day of economic insanity.”
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