Reason to be optimistic.

"United States President Donald Trump...described Prime Minister Narendra Modi as a 'great friend' while announcing a 26% tariff on Indian imports." "India, very, very tough...They charge us 52%. You have to understand, we charge them almost nothing, for years and years and decades." ET. "However, India will be able to navigate the tariff challenges smoothly." Because, though "Indian exports of steel, aluminium and auto-related goods will face a 25% tariff, while pharmaceuticals, semiconductors, copper and energy related products will not be taxed." ET. Still, "The tariffs are projected to reduce Indian exports to the US by approximately $30-33 billion, equating to a 0.8-0.9% contraction in India's GDP. This downturn could exacerbate existing economic challenges, including a slowdown in growth and weakened consumer confidence." CNBC. Economist Swaminathan Aiyar compared Trump's tariffs to "the protectionist Smoot-Hawley tariffs of the 1930s that exacerbated the Great Depression." "This is going to lead to more inflation with a recession, stagflation," Aiyar said. However, the comparison is not between similar economies of the US or of the world.  "The Smoot-Hawley Tariff Act, enacted in June 1930, added about 20% to the United States' already high import duties on foreign agricultural products and manufactured goods. The Fordney-McCumber Act of 1922 previously raised the average import tax on foreign goods to about 40%." Investopedia. In 1930, the US was suffering from the Great Depression with falling GDP and very high unemployment. wikipedia. This time, the US GDP increased by 3.1% in the third quarter (Q3), and by 2.4% in Q4 (October, November and December) of 2024. bea.gov. And, "Private sector payrolls increased by 155,000 in March, according to ADP Research. That was above all but one estimate in a Bloomberg survey of economists." ET. The Smoot-Hawley added 20% on top of existing 40% tariffs, but now, the effective rate of tariffs was "2.4% when Trump took office." "The effective tariff rate measures the total tariffs measured on imports." Investopedia. Also, Trump's tariffs are not uniform but vary from country to country and are therefore subject to negotiations. In 1930, Europe still had its colonies to loot and could retaliate. No longer. Indian policymakers should be worried. "Instead, they seem to be looking forward to it with a certain confidence, even optimism." Because, "They are now convinced that Indian manufacturing may never be able to produce things more cheaply or with consistently higher quality than its peers. A nation that thinks it can't win on either cost or quality will naturally welcome a third axis." "Exports pessimism is a disease in India. It is one that has become so endemic that we appear to be optimistic when faced with disruptions to trade," wrote Mihir Sharma. So, "India's simple average tariff rate on industrial goods has been brought down to 10.66% after the Budget for 2025-26, while that on agriculture items, including textiles sits at 39% as per 2023 levels." MC. India has high tariffs to protect its crony capitalists (Le Monde) and there are no worries as long as they are protected. Maybe Trump is doing us a favor. Removing protection from parasites could rejuvenate the system. Optimism could be correct.