Trade by Threat - Trump forces compliance, not cooperation: GTRI

According to GTRI, Trump's trade strategy is based on pressure tactics rather than cooperation, turning trade deals into one-sided forced pacts.

The report said that Trump's approach avoids traditional Free Trade Agreements (FTAs) rules that are based on mutual tariff cuts and reciprocal benefits. Instead, his strategy demands that partner countries reduce tariffs and commit to buying U.S. goods, while the U.S. offers no similar concessions in return.

These deals are signed under pressure and lack fairness, GTRI noted.

GTRI said, "Trump's trade strategy circumvents traditional Free Trade Agreements (FTAs), demanding tariff cuts and purchase commitments from partner countries without reciprocal U.S. concessions."

One of the key points highlighted in the report is that no trade deal under Trump offers long-term certainty. Even after signing an agreement, countries remain vulnerable to fresh tariff threats.

For instance, Trump recently announced a 10 per cent tariff threat on BRICS nations, including India, citing their "anti-American policies." This shows the political and unpredictable nature of U.S. trade actions under Trump.

India has already submitted its final trade offer and is expected to conclude a deal with the U.S. soon. However, the GTRI report warned that this agreement may not protect Indian exports from future unilateral tariff hikes.

The report said that even if a deal is signed, Indian exports may continue to face a minimum 10 per cent additional levy. This is because the 26 per cent surcharge imposed in April on Indian goods might not be fully withdrawn.

"Even if a deal is struck, Indian exports may still face a minimum 10 per cent additional levy, making it a pressured compromise, not a true partnership," GTRI stated.

President Trump has extended the deadline for countries to sign trade deals from July 8 to July 31. After this, starting August 1, countries that do not comply may face country-specific tariffs of up to 40 per cent. India is among the countries that have received formal tariff warning letters from the U.S. administration.

The report also noted that these new tariffs will be imposed over and above the existing Most Favoured Nation (MFN) rates, but will not apply to sectors like steel, aluminium, autos, and auto parts that already face separate duties.

For example, in Japan's case, proposed tariffs on products like pharmaceuticals, semiconductors, books, smartphones, energy, and copper will remain at 0 per cent. Meanwhile, steel and aluminum will continue at 50 per cent, autos and auto parts at 25 per cent, and other products will see tariffs rise from 10 per cent to 25 per cent.

GTRI pointed out that Trump lacks the Fast Track Trade Authority from Congress, which means he cannot legally reduce MFN tariffs. Instead, he is offering to roll back only the "Liberation Day" tariffs imposed in April using emergency powers.

However, a U.S. federal court has already ruled these tariffs unlawful, and the case is currently under appeal, making the legal basis for these tariffs uncertain.

GTRI concluded that such deals offer limited benefits while leaving the door open for future tariff actions by the U.S., raising concerns about the long-term stability and fairness of these agreements. (ANI)