Global Tariff War: India Stands Strong As US Targets Emerging Economies Opinion

By Air Commodore TK Chatterjee (Retd):

Fluctuat nec mergitur. In Latin, it means 'tossed (by waves), not sunk'. This is Paris city's motto. When terrorists attacked a crowded music concert in the city in November 2015, which caused 130 deaths, this adage stayed lit on the Eiffel Tower for days, reminding citizens that challenges are part of life and that we will overcome them. Hopefully, this will also be the motto for all countries facing the ongoing tariff and trade war launched by the USA against most of the world. India, of course, has managed to attract special attention, so the adage is perhaps even more applicable to it.

Tariff wars are nothing new. They have been used historically for various reasons, such as revenue generation, domestic industry protection, or geopolitical leverage. Whatever the reason, it has been proven time and again that nobody wins in such economic wars. They cause disruptions in supply chains, higher consumer prices, reduce growth, and create a climate of uncertainty in which all parties suffer.

Some of the famous trade wars

The Smoot-Hawley Tariff of 1930

During the Great Depression, the USA increased tariffs on about 20,000 imported items to protect American jobs and industries. As a response, major trading partners also raised tariffs. This led to a 60% drop in global trade, worsening the US economic downturn. Some historians believe this trade war triggered a worldwide economic crisis, which fostered extremism and eventually led to World War II. Economists say the backlash prompted the USA to adopt more liberal trade policies after World War II.

Chicken War of 1960

In the early 1960s, American poultry exports flooded Western European markets, benefiting from intensive farming and low prices supported by U.S. government policies. European farmers struggled to compete, and the EEC responded by implementing tariffs as high as 13.43 cents per pound, and sometimes up to 40–45% on imported chicken, dramatically reducing U.S. poultry sales in Europe. The trade dispute grew increasingly political, with U.S. leaders protesting the EEC's measures and demanding trade fairness. When diplomatic efforts failed, President Lyndon Johnson imposed retaliatory 25% tariffs on selected European goods, including potato starch, brandy, dextrin, and most notably, light trucks. The dispute resulted in an immediate decline in American poultry exports and a long-term shift in the U.S. automotive market, with the 25%“Chicken Tax” on light trucks still affecting global supply chains decades later. Although most of the original tariffs have expired, the“Chicken Tax” remains in effect, illustrating how a trade conflict over poultry has had enduring consequences far beyond agriculture.

USA-Japan Trade Tension(1980-90)

Due to a boom in the automotive and electronics industries in Japan, its trade surplus vis-à-vis the USA grew appreciably. The USA complained of unfair trade practices by Japan and threatened tariffs on Japanese imports. Japan reconciled by shifting production facilities of auto giants like Toyota and Honda to the USA. This episode fostered the globalization of products.

Trade wars, though frequently initiated to serve particular economic or political agendas, usually trigger effects far beyond their original cause. They unsettle international supply networks, increase costs for everyday shoppers, and sometimes create extended periods of financial slowdown or even spark tension. While some positive deals may emerge, the total losses frequently surpass the possible gains.

History shows unmistakably that, while countries must look out for their own priorities, lasting economic health and growth are most effectively secured through collaboration and free trade. While protectionist measures might seem helpful in immediate issues, once they evolve into broader trade conflicts, overall economic well-being declines for all parties, leaving no genuine victors. The current American trade war is not going to follow any different path.

Geopolitical realignments due to trade wars

Trade wars have historically caused or contributed to significant geopolitical realignments, including shifts in alliances, colonial expansions, economic dependencies that escalated into military conflicts, and changes in global power balances. Here are a few examples.

The Smoot-Hawley tariff set off a wave of global protectionism and forced countries into new trading blocs, forever altering international alliances and marking a retreat from the relatively open trading system of the 1920s. The Smoot-Hawley tariff war is also believed to have contributed to Germany, Italy, and Japan to unite, forming the Axis Powers against the Allies in WWII.

British efforts to force open Chinese markets for opium trade resulted in military victories that imposed unequal treaties on the Qing Dynasty. This led to the establishment of Hong Kong as a British colony, expanded Western influence in Asia, and accelerated the decline of Chinese imperial authority, fundamentally altering East Asian geopolitics by opening China to foreign exploitation.

The Russians and the Chinese have not been the best of friends throughout history. The economic sanctions imposed by the West on Russia after its invasion of Crimea and Ukraine, along with a US-led trade war with China, have brought these two nations closer together and created an unwritten alliance against the Western world. Similarly, the recent aggressive trade policies of the USA against India, Brazil, and South Africa have strengthened the resolve of BRICS to establish a viable alternative to the dominance of the US dollar and to promote the idea of a multipolar world. The Global South, the SCO, and ASEAN are all preparing for a paradigm shift in global economic policies. The recent Sino-Indian camaraderie is a direct result of the trade war. It was astonishing, but encouraging, to read a recent Global Times editorial that said,“the dragon and the elephant can dance together.”

These cases demonstrate a pattern where trade disputes often escalate beyond economics, destabilizing international relations and prompting military or diplomatic shifts. While not every trade war leads to such outcomes (e.g., the 1993 Banana Wars between the U.S. and EU primarily resulted in prolonged negotiations without major realignments), the historical record shows they frequently contribute to broader geopolitical changes, especially when combined with existing rivalries or economic crises.

While most countries affected by the US tariff war have buckled and conceded economic and other rights to the US, India has not. It has shown its willingness to take the hit and fight on. As per the Global Trade Research Initiative report, India's overall export to the USA will shrink from $86.5B to $49.6B in 2026, down 43%. But India's global exports of goods plus services will rise to $839.9B in FY 2026 from $824.9 in FY2025, up almost 2%, as per Economic Times. Overall, GDP growth will be reduced, but it will still be higher than that of most emerging economies in the world.

In contrast, the EU and the UK, a group of supposed developed and prosperous nations, have led the way in this unabashed capitulation to the personalised foreign policy of the POTUS and his misguided pursuit of a Nobel Peace Prize. We cannot blame countries like Pakistan, Cambodia, and Armenia for following suit. It is well known that those developing nations or emerging economies that are denied access to the US market will suffer-some of their SMEs will shut down, jobs will be lost, unemployment and related issues will rise. Some, like India, will be less affected thanks to the size of their economies and large internal markets, but smaller economies will endure far more damage. Some may even collapse because of this unnecessary shift in global trade policy. But, whether it is a kinetic war or an economic one, Winston Churchill's quote remains relevant – nations that go down fighting rise again; nations that go down tamely never do. Better still, let all affected nations say at the end of this unfair war: FLUCTUAT NEC MERGITUR.

Air Cmde TK Chatterjee(red), the author of this writeup, was commissioned into the IAF in Dec 1976 in the fighter stream. In his 33 years long career he has flown almost all fixed wing aeroplanes that fly in the subcontinent, from the earliest MiG21 upto the Rafale and the F16. He is a Qualified Flying Instructor, an Experimental Test Pilot, and an alumni of the Defence Services Staff College. After IAF, he was involved in the training of pilots for the civil aviation industry at the Indira Gandhi Rashtriya Uran Academy and have contributed about 200 trained pilots to the industry.

(Disclaimer: The opinions expressed are solely those of the author and do not reflect the views or stance of the organization. The organization assumes no responsibility for the content shared.)

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