Chidambaram wants Modi govt to spell out its response to Trump’s tariff war

Senior Congress leader P. Chidambaram on 27 March, Thursday, asked the government to spell out India's response to US President Donald Trump's threat of a tariff war, alleging that no discussion in Parliament or consultation with Opposition parties has been held on the matter.

Initiating a discussion on the Appropriation (No. 3) Bill, 2025, and the Finance Bill, 2025, that were moved by finance minister Nirmala Sitharaman for consideration by the Rajya Sabha, he cautioned that a tariff and trade war would lead to depressed exports, lower FDI, higher inflation and currency depreciation.

He said India must stand with saner voices in the world such as Canada, Britain, France, Germany and Japan and collectively do everything to prevent a tariff and trade war.

Referring to Trump's statement that the US will impose tariffs from 2 April, the former finance minister said,"What is the government's response? What is India's response? There has been no statement of policy, no discussion in Parliament, no consultation with Opposition parties. The government is holding its cards close to its chest, if it has any cards at all."

Chidambaram further said,"A tariff war will lead to a trade war. The whole world will be hurt..."

He also alleged that Sitharaman had announced customs duty reduction on items including motor vehicles, passenger cars, goods and transport vehicles, motorcycles, bicycles and even toys in the Union Budget 2025-26 under the pressure from Trump.

"Is this a genuine change of heart? Is it a genuine change of policy? I don't believe so. I think this is the effect of Mr Donald Trump. The Trump Effect has forced the government to reduce these duties," Chidambaram remarked.

The senior Congress leader claimed that despite several efforts — including withdrawal of the digital service tax of 6 per cent on Tuesday, 25 March, lavish praise of Trump by Prime Minister Narendra Modi and reduction in customs duties — the US president is not satisfied.

"First they tried concessions on 1 February. Mr Trump was not satisfied. They tried flattery. He doesn't seem to be satisfied. If concessions and flattery have failed and the tariffs are going to be imposed on our exports on 2 April,  I want to know what is the government's response."

A tariff war will be in breach of the WTO multilateral and bilateral trade agreements and international conventions, he noted. It will wreck the world economy; it will ruin the economies of developing countries, Chidambaram asserted.

Participating in the discussion, Sagarika Ghose (TMC) said,"...A tsunami is coming on 2 April. A new round of reciprocal tariffs is about to be announced by the Donald Trump administration and could prove devastating for India's export earnings."

Citing a report, she said 87 per cent of total exports could be hit, worth as much as USD 66 billion. Industries employing lakhs of Indians will suddenly lose market share in the US.

Responding to the Opposition remarks, Kunwar Ratanjeet Pratap Narayan Singh (BJP) said,"Until the tariff is not implemented, what speech or what mention can anyone make on it? We will be able to talk about it only after it is implemented, after 2 April."

He alleged that earlier it was said that India should maintain relations with America, but now when Prime Minister Modi is talking about the benefits that India can get for trade by improving relations with the US, the Opposition has an issue.