The world in 2025 faces a complex economic and geopolitical polycrisis. India’s position is challenged by disruptions in global trade, rising protectionism, and shifting alliances. The United States’ aggressive economic policies under President Trump have intensified these challenges. India must recalibrate its strategy to safeguard national interests and promote a fairer global order.
Context of America’s Economic Warfare
The US has imposed tariffs on nearly 70 countries and sanctions on over 30 nations. This disrupts free movement of goods, services, and labour. The policy aims to protect American industries and counter China’s economic rise. However, it also pressures allies and trade partners, including India. The US uses economic coercion to maintain dominance in global markets and technology sectors.
Motivations Behind US Tariff Policies
Domestically, the US seeks to appease a population disillusioned by globalisation’s inequalities. The policies reflect economic populism mixed with xenophobia. Tariffs act as hidden taxes on American consumers and companies. They also serve to weaken competitors and reinforce the dollar’s global supremacy. Despite rhetoric, these moves have bipartisan support and historical parallels in mercantilism.
Impact on India’s Economy and Diplomacy
India faces high tariffs on textiles, jewellery, metals, and auto parts. This harms exporters and economic growth. The US pressures India to open its agricultural sector while maintaining its own protectionist barriers. Diplomatic ties strained as India balances relations with the US, China, and Russia. India’s northern borders remain tense, complicating geopolitical calculations.
India’s Strategic Challenges
India must question its alignment with the US, given conflicting interests. The US maintains ties with Pakistan and limits technology collaboration with India. India’s foreign policy under Prime Minister Modi has not fully advanced strategic goals and sometimes isolated India regionally. Managing competition with China and avoiding multi-front conflicts is crucial.
Opportunities for India Amidst Disruptions
India can leverage the polycrisis to promote multipolarity over unipolar or bipolar world orders. It can champion a New Economic Deal that benefits Global South countries. Structural reforms are essential – boosting manufacturing, increasing investment, improving scientific research, and revitalising public sector enterprises. India must build trust with domestic and international stakeholders and pursue bipartisan consensus.
Policy Priorities for India
India needs to confront US economic coercion firmly and protect national interests. It should diversify partnerships beyond traditional allies. Strengthening internal economic fundamentals will enhance India’s global standing. A unified national approach is vital to navigate complex global challenges and realise India’s strategic potential.
Questions for UPSC:
- Point out the impacts of economic protectionism on global trade and how countries like India can respond to it.
- Critically analyse the role of multipolarity in contemporary international relations with suitable examples.
- Estimate the challenges and opportunities in balancing national security and economic diplomacy in India’s foreign policy.
- Underline the structural reforms necessary for India to strengthen its manufacturing sector and attract foreign investment.
