Congress leader P Chidambaram asked the government to spell out India’s response to US President Donald Trump’s threat of tariff war, alleging that no discussion in parliament or consultation with Opposition parties has been held over the matter.
He called for finding common ground with other nations that share the same interests in pushing back against Mr Trump, and warned that if Mr Trump starts picking out individual countries and applying different tariffs, the affected nations could be left to fend on their own.
In an interview to NDTV, Mr Chidambaram said if the Indian government’s perception is that America is taking one step forward and two steps backwards, it must have a policy to counteract that.
“I mean, it can’t be in uncertainty. Of course, Americans are uncertain, let’s assume so. But you must have alternative scenarios. What if they take one step forward? What is our response? What if they take two steps backward? What is our response? And that response need not be made public to the whole world, but at least there must be a statement in parliament, or there must be a consultation with opposition parties. We are completely in the dark,” Mr Chidambaram, who was Union finance minister under the United Progressive Alliance (UPA) government, told NDTV.
“In fact, my information is, most ministers are in the dark. Who is involved in making this reactive policy to America’s uncertain policy? I don’t know. Nobody seems to know,” he said.
Mr Trump’s decision to slap a 25 per cent tariff on all auto imports has cast uncertainty over India’s nearly $7 billion of exports to the US, which industry fears could squeeze margins. Automobiles and car parts imported to the US would face a 25 per cent tariff starting April 2.
While India is not a big exporter of cars to the US, Tata Motors’ luxury car subsidiary Jaguar Land Rover (JLR) is deeply entrenched in the American market. Indian auto ancillary firms will see the biggest hit as they export a lot of components to the US.
About a fifth of the revenue of India’s auto component sector is derived from exports. Of this, 27 per cent is to the US market alone.
“I think the government is making sort of impromptu, unilateral, knee-jerk decisions. For example, in the Budget speech, they got rid of the 2 per cent tax. Day before yesterday, the finance minister announced that the 6 per cent digital service tax, popularly known as the Google tax, will go. Now, what more are they going to concede to Mr Trump?” Mr Chidambaram said.
“If you don’t wish to have a public discussion in parliament, then you should at least invite the principal opposition parties which are represented in parliament and take leaders into confidence of what alternative scenarios are being worked out,” he added.
Mr Chidambaram defended his comment that most ministers are in the dark on this matter.
“I think at the moment, only the external affairs minister and perhaps the commerce minister who went on a delegation to the US are privy to what is going on. I don’t think other ministers know. I’m sure the agriculture minister does not know. I’m sure the industries minister does not know. But they are making concessions? I don’t know. Are you making concessions on agriculture? Are you making concessions on industrial goods? Are you making concessions on intellectual property? I don’t think anybody knows,” the former Union finance minister said.
He said India should put its interest first, but many countries are finding common ground in acknowledging that unilateral tariffs imposed by the US are unacceptable.
“There are WTO rules; there are multilateral and bilateral trade agreements; there are international laws and conventions. So if you want to rewrite the tariffs of several countries, you must hold a discussion. This is what Prime Minister Mark Carney of Canada is doing. He has taken his parliament into confidence, at least the leaders into confidence. And he says we will coordinate with the European countries and respond to Mr Trump’s unilateral tariffs,” Mr Chidambaram said.
“Now, I’m sure the oil producing countries are also coordinating among themselves. We are a major agricultural exporter. We are a major textile exporter. We also export a lot of industrial goods. So we must band together with countries which are in the world market for agricultural exports, textile exports, and industrial goods exports, and evolve a common approach. You see, if he [Mr Trump] picks one country at a time, and imposes tariffs, it will ruin the economy of that country.
“Suppose he picks India, and he leaves other countries out. Suppose President Trump picks India and says, ‘these are the tariffs from goods exported from India’, we’ll be ruined. In a matter of three to six months, our economy will be ruined.
“I’m afraid Mr Trump is not going to group all the countries together and impose universal tariffs. He’s giving a number for each country, what they have calculated, I’m told, calculated as the average weighted trade tariff. And he’s going to pick one by one and force them to surrender. If he does that, and if he picks India, other countries will say, ‘we have not been picked up’. So unless you take action to forestall such picking out countries, and imposing tariffs, you’ll be left high and dry after the first attack,” Mr Chidambaram said.