As Trump’s protectionism threatens to unravel decades of global integration, India stands at a crossroads. It can seize this moment to redefine globalisation and cement its role as a global leader.
New Delhi: Donald Trump’s return to the White House portends a dismal future for globalisation. His bold tariff promises— up to 20% on all imports and 60% on Chinese goods, now compounded by his freshly enacted 25% tariffs on steel and aluminium— has ignited market jitters, threatening a global economic slowdown. Trump’s recent refusal to dismiss a U.S. recession, citing a transitional period before his policies take effect, amplifies the unease. For India, this upheaval represents both a disruption and an opportunity.
Post-World War II institutions fostered economic interdependence that transformed the world in two ways. First, it subdued conflicts, as wars disrupted trade. Patrick J. McDonald, a Texas University professor, has shown that from 1960 to 2000, a country in the bottom 10 percent for protectionism was 70 percent less likely to engage in conflict than one in the top 10 percent. Second, it lifted millions out of poverty, as seen after India’s 1991 and China’s 1978 market reforms. However, global trade has stalled, with the past five years marking the weakest growth since the 1990s. The influence of multilateral institutions such as WTO—whose appellate body has been in a limbo since 2019—has waned. Trump’s protectionism accelerates this decline.
IMPACT ON INDIA
Trump has vowed reciprocal tariffs on India starting April, potentially reaching 100% on some goods. This could raise our annual U.S. export costs by 9-10%, severely affecting sectors such as engineering goods, and MSME firms. Yet, the reconfiguration of global supply chains offers advantages. The “China plus one” push could see companies like Apple shift a significant chunk of their manufacturing to India, channeling billions in investments. Viral Acharya, former RBI deputy governor, suggests that greater market access for American firms could spur domestic manufacturing by forcing Indian companies to compete globally.
WIDER COSTS OF PROTECTIONISM
Globalisation transcends commerce, fostering a global community through the exchange of people and values. Trump’s policies threaten this fabric. His xenophobic rhetoric fuels discrimination, with FBI data from his first term showing a spike in hate crimes in counties he won decisively. Xenophobia in America normalizes it globally given US’s moral sway, as seen in Poland’s refusal of the EU migration pact.
Trump’s exit from global agreements such as the Paris deal can decelerate collective action against global challenges. His last withdrawal weakened commitments from other nations such as Brazil, where deforestation surged 53% from 2018-2021. Another departure by the world’s second-largest emitter could derail global climate cooperation ahead of COP30.
Economic reactionism also has security repercussions, as shown by China’s recent assertion that it was prepared for “any type” of war. History also provides a sobering reference: Smoot-Hawley tariffs triggered retaliatory measures that exacerbated economic nationalism preceding World War II.
INDIA AS A BRIDGE
India’s democratic foundations and $4.3 trillion growing economy position it to actively shape these changes instead of merely weathering them. Rather than mirroring the protectionist retaliation of Canada and China, India should resist tit-for-tat responses and leverage its growing influence. A key step is reducing the average tariff rate to 10% or less, countering protectionism while boosting manufacturing. To attract global firms, India must enhance its Ease of Doing Business through measures like strengthened IP protection and labour law rationalization, as the current framework—with a labyrinth of more than 100 central and state laws—remains a significant barrier. India should also strengthen multilateral institutions like the WTO while pursuing bilateral agreements to diversify exports. In this context, India’s Free Trade Agreement negotiations— such as those with the E.U.—must move beyond the pattern of reactive, last-minute deals, often pursued under pressure, to secure substantial advantages like expanded market access.
To assume global leadership, India also needs significant emerging tech breakthroughs like China’s DeepSeek, not just tokenistic wins like the Global IndiaAI Summit. Israel—which invests 5% of its GDP in R&D against India’s <1%—proves that true global influence comes from innovation. India should also host recurring high-profile governmentled ‘Globalisation Summits’ in Delhi, cementing its role as a global convergence hub, much like Davos for the WEF. Flagship forums on trade, climate, and security will greatly strengthen India’s diplomatic influence.
Simultaneously, India must continue to assert its strategic autonomy, cooperating with the U.S. without yielding. Initiatives like the Rupee-Ruble trade arrangement and recent support to Mauritius for Chagos’ sovereignty offer a soft challenge to America’s dominance, reinforcing India’s independent stance. Equally vital is promoting peaceful co-existence and mutual growth, a principle rooted in India’s normative foreign policy. Advocacy for the Global South, exemplified by the African Union’s G20 induction, underscores this commitment.
Globalisation shifts between openness and isolation, a process that will give rise to new forms of cooperation in a multipolar world. India’s status as a rising superpower enables it to lead this transition, defining the next phase of the international economic order.
Rajesh Mehta is a leading international affairs expert and Nikhil Kalia is a researcher on geopolitics and trade.