Are we Trumped?

"A sell-off in the US stock market gathered steam yesterday," "after President Donald Trump ducked questions about whether the US economy was facing a recession or price rises as a result of tariff moves, while warning instead of a 'period of transition'." BBC. "The Dow closed lower by 890 points, or 2.08%," the broader S&P 500 fell 2.7%, while "the tech-heavy Nasdaq Composite plummeted 4%." CNN. "Ontario, Canada's most populous province, is adding a 25% surcharge to all electricity exports sent to the US as part of a retaliation against the Trump administration's tariffs on Canadian products." CBS. India's benchmark stock market index, the Sensex hit an all-time high of 85,978.25 points on 27 September 2024 (Yahoo), but is trading down at 73,850.21 this morning, down by over 12,000 points since its highs. BSE. "India is a very high tariff nation, Trump has said as he reiterated that reciprocal tariffs on countries that impose levies on American goods will kick in on April 2." NDTV. "India charges us massive tariffs. Massive. You can't even sell anything in India...They have agreed, by the way; they want to cut their tariffs way down now because somebody is exposing them for what they have done," Trump said. "While India has not directly responded to Trump's announcement regarding reciprocal tariffs, it expressed a commitment to enhancing trade relations with the US, including reducing tariff and non-tariff barriers as part of the bilateral trade agreement." ET. "Monetary authorities in China, India and elsewhere have waged a prolonged campaign against the strong dollar, using a mix of official reserves and opaque derivatives trades to defend their currencies. But their moves have pushed up borrowing costs for local banks just when slowing economies need more liquidity." This is because of the impossible trinity - "the idea that countries can't simultaneously control their currencies, independently set interest rates and allow capital to move freely across borders." ET. "The Indian rupee has weakened about 3.5% against the dollar in the past six months to 86.88 on 7 March ." So the government expects the Reserve Bank of India (RBI) to continue to defend the rupee by selling dollars. Mint. As the RBI sells dollars it creates a shortage of rupees in commercial banks. India imposes "a simple average rate of 17% on all goods compared to about 3.3% imposed by the US. The trade-weighted tariffs further highlight this gap - 12% in India vs 2,2% in the US." In agriculture, "The simple average tariff is 39%  and the trade-weighted average is 65%" for India, while for the US it is 5% and 4% respectively.  FE. Tariff on imports protects domestic industries from competition and allows them to sell at inflated prices which, in turn, leads to higher tax collections. "Gross GST collections grew 9.1% to about Rs 1.84 trillion in February. ET. There is a steady flow of wealthy Indians leaving India for other countries. One of the main reasons is high taxes with poor services. ET. Can the government afford to lose taxes to improve trade? And, if so, how will it balance its budget? Are we Trumped?