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Trump’s protectionist plans a dampener for Indian exports

Donald Trump’s presidential victory should be disquieting to developing nations like India that export globally to power their economic growth. The president-elect has promised to rein in free trade and globalisation that are believed to be cutting into American manufacturing and factory employment.

Trump plans to execute his promises through prohibitive tariffs and controls that could turn the US into a nettlesome export market for developing countries. As time is nearing when he would take over as the president, fear is growing. The question topmost is will he proceed with his protectionist plans?

By output value, manufacturing was one-third of America’s USP in the 1950s when the country not only produced heavy durables like aircraft, autos and industrial machinery but also made a wide-range of consumer non-durables like apparel, electrical appliances and accessories. Since then the US has evolved further into an intellectual and service-based economy driven by market dynamics and the choices businesses made, the service sector is presently predominant and manufacturing has shrunk to 12 per cent of GDP. Most standard goods and those requiring labour-intensive processes have moved to low-wage countries propelled by cost pressures in a globalising world.

In the last 30 years, the US has become a net merchandise importer with manufacturing employment down to 12 million from a high of 20 million. The promise of rejuvenation through import barriers and trade restrictions is what has catapulted Trump to presidency. Trump intends to employ punitive tariffs on cheap merchandise entering the US to encourage domestic manufacturing and bring back lost jobs. His primary tariff targets would be China and Mexico but one cannot rule out the effects of his action on other countries that export similar products like India.

 
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