Full Text: Experts on Tariffs, India and the Global South Today

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26-05-2025

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Full Text: Experts on Tariffs, India and the Global South Today
Centre for Financial Accountability
18 minutes ago
Amidst rapidly shifting geopolitical shifts, the first webinar in a joint series attempted to understand the deeper currents shaping today's tariff war and its implications on Global South economies.
President Donald Trump speaks to reporters before boarding Air Force One at Morristown Municipal Airport in Morristown, N.J., Sunday, May 25, 2025. Photo: AP/PTI.
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The Centre for Financial Accountability (CFA), in collaboration with The Wire as media partner, Sambhaavnaa Institute, and Progressive International, is co-organising this eight-part webinar series titled 'The Political Economy of the Trump Era: Challenges & Opportunities of the Shifting World Order', conceived to better understand the global moment we are all inhabiting.
Amidst rapidly shifting geopolitical shifts, the first webinar in the series titled 'The Tariff Wars: India and the Global South in a Fragmenting System of World Trade' attempted to understand the deeper currents shaping today's tariff war and its implications on Global South economies.
At a time when rising protectionism, weakened multilateralism, and increasing geopolitical tensions are reshaping how trade is negotiated and controlled. The webinar moved beyond the narrow framing of tariff disputes to examine the historical biases and structural inequalities embedded in the global trading system to highlight how trade rules have long favoured the interests of developed countries and multinational corporations, often at the expense of the Global South. Speakers traced the continuity of US trade policy across administrations, unpacked the use of non-tariff measures as hidden barriers, and critiqued the expansion of trade rules into areas like data governance, intellectual property, and government procurement. Central to the conversation was the urgent need for the Global South to assert economic sovereignty and find newer alternatives through regional cooperation, welfare-led development, and alternative financial architectures.
This webinar included speakers Prabhat Patnaik, Ranja Sengupta and Andres Arauz and was moderated by V Sridhar.
Below is the full text of the talk. The transcribed text has been edited lightly for clarity and readability.
Opening Remarks by V Sridhar:
'The first point that I would like to make, the assumption of Donald Trump as President of the United States has triggered a widely contested debate. However, a provocative statement must be made: this is not a tariff war. In fact, I don't think it is even about tariffs or a question of reciprocal tariffs. Nor is it a war in the sense that we understand wars to be, because one side is firing all the shots. And neither is this about trade. Instead, it is about controlling the productive basis of countries, especially those in the Global South. Therefore, it is much more than trade that is at stake here.
The second point is that the post-war imperialist axis is undergoing convulsions. Where it is heading, and what contradictions are inherent in these convulsions, is something our specialist speakers will talk about. But the dumbed-down media characterisation of Trump as a madman is both intellectually lazy and bereft of analytical rigour. That's the easiest thing to ascribe it to.
Since the tariff onslaught was unleashed on countries all over the world, there has been some kind of romantic nostalgia for the so-called consensus on past trade agreements. But I believe there is no salvation in that. If we go back to GATT – the General Agreement on Tariffs and Trade, which preceded the WTO, it was unequal, unfair, and biased in favour of the developed industrialised countries and against the countries of the Global South.
Take GATT, for instance. Through the actions of the developed countries, acting in concert with the multinational companies that were ascendant in that period, several major primary commodity agreements were undermined and almost all of them were completely demolished. They became ineffective due to the intransigent attitude of these developed countries and the major multinationals that controlled the flow of trade in these commodities.
Similarly, the WTO itself has been in limbo for the last several years. After the global financial crisis of 2007–2008, it is effectively dead in the water. There is no salvation in salvaging the WTO regime, which has long been against the interests of the Global South. In particular, I would draw your attention to the Agreement on Agriculture which is a fundamentally lopsided agreement that has gone against the interests of the poorest people on this planet. It is a rigged element that is flawed in every respect.
The chaos triggered by Trump's tariffs is aimed at driving countries, especially poorer countries into negotiating deals. These deals are fundamentally flawed. Why? Because when a superpower negotiates with a lesser power, the superpower has a portfolio of interests across many fronts. Trade-offs can be made in realms seemingly unconnected to trade – climate change, nuclear power equipment suppliers, government procurement contracts.
Take, for example, the Indian context. Even allowing Elon Musk's Starlink access to the Indian market, who can say with authority that there is no quid pro quo in the ongoing negotiations between the Narendra Modi government and the United States regime? That may not be on the table, and it is not possible to draw a direct causal link, but circumstantial evidence from the past tells us that these connections are very much there.
For instance, the Indo-US nuclear deal, signed under the earlier Congress-led government, resulted in Air India—then the national carrier—being forced to purchase a large number of aircraft. It was like buying potatoes and onions. The burden was so great that it effectively ruined Air India, which was later privatised. Again, I cannot draw a direct causal connection, but it would be foolish to believe these are not related in some way.
Such deals also affect trade relations with other countries. The recent US-UK trade deal, for instance, prohibits the UK from entering into trade or investment arrangements with Chinese companies. After recent talks between the US and China in Geneva, China protested that this was unfair.
Take the Indo-UK trade deal: it opens up government procurement to UK companies, effectively treating them on par with Indian firms. These negotiations undermine national sovereignty in a fundamental way. Countries end up ceding ground in areas seemingly unrelated to trade but ultimately compromising their sovereign rights in various realms.'
Prabhat Patnaik
On Trump's tariffs, the global trade regime, and the crisis of neoliberalism
'The discussion that has generally unfolded around Trump's tariffs, to my mind, is shot through with misconceptions. Two common claims dominate mainstream commentary: first, that Trump unilaterally subverted a system that had been carefully negotiated among nations; and second, that he behaved like a 'madman' or 'a bull in a china shop.' Both these propositions, I believe, are wrong.
Firstly, as already pointed out, the so-called international rule-based order that existed before Trump was highly iniquitous. It was not just unfair to countries of the Global South and was especially damaging to the poor within those countries.
There are at least three obvious problems with that order. One, it rests on the hegemony of globalised finance. Even Trump, for all his apparent radicalism, never suggested capital controls or any restrictions on financial flows. Countries have been drawn into opening their economies to free financial movement. As a result, the nation-state ends up confronting globalised finance, and therefore must bend to its will.
This is a subversion of sovereignty, of popular sovereignty, and of democracy. No matter which government comes to power, if a country is caught in the web of financial flows, its policies will be dictated by global finance. So even elected governments cannot meaningfully change course. This, in my view, is a direct attack on democracy in the Global South.
The second flaw in the system is the artificial and baseless distinction drawn between different types of subsidies. Direct cash transfers are permitted under trade rules, but subsidies through input and output pricing are frowned upon. This allows the United States and Europe to massively subsidise their farmers and sometimes to the extent that subsidies equal half the total value of agricultural output.
In India, where we have 120 million farmers, direct cash subsidies are simply not feasible. So we provide support through subsidised inputs or assured prices. Yet we are told these are trade-distorting. There is no rational basis for this. The only economic justification is a theoretical one: that in perfectly competitive markets, any interference with relative prices is inefficient. But perfect competition is a myth. To draw a conclusion from such a mythical framework and use it to justify Northern subsidies while condemning those in the South is deeply unjust – and inimical to peasant agriculture.
The third issue is the export-led growth model. There's a lot of confusion around this. A few success stories are held up and used to argue that if all countries just liberalise, they too can succeed. That is nonsense. The world market has a finite size. If one country grabs more, others get less. Supply does not create its own demand. Export-led growth pits countries against one another which leads to a kind of Darwinian competition that is ethically unacceptable and materially harmful for the majority. So this so-called 'rule-based' order is of little value to us. Rather than mourn its decline, we should treat this moment as an opportunity to discard it and develop alternative frameworks for trade and finance.
Now, why did Trump do what he did? I believe it's not because he is a madman, but because the neoliberal economy has run into a cul-de-sac. Growing inequality has suppressed global demand. Labour productivity has risen, but wages have stagnated. The result is a massive rise in economic surplus – but that surplus cannot be absorbed through consumption, because the rich don't consume as much of their income as the poor do.
Redistributing income from poor to rich leads to overproduction. This tendency became pronounced after the collapse of the US housing bubble. Even before the pandemic, the world's decadal growth rate was at its lowest since World War II, which have only worsened since the pandemic.
Under these conditions, a country can only grow at another's expense. The Keynesian route of government expenditure through taxing the rich or deficit spending, is essentially blocked. Globalised finance won't allow it. Most countries are bound by fiscal responsibility laws that cap deficits at 3% of GDP. Taxing the rich is also frowned upon. So governments cannot use public spending to raise demand.
That's why countries are turning to 'beggar-thy-neighbour' policies and policies that export unemployment by grabbing others' markets. Trump's tariffs are one such mechanism. These only work if other countries don't retaliate and so he's been trying to prevent that through strategic negotiation.
But this isn't just about Trump. It's about the crisis of world capitalism. Trump is merely responding to a deeper structural problem.
In this context, I believe countries like India should exit this entire rule-based regime. We must expand our home market. That means increasing public expenditure, especially on welfare and financing it by taxing the rich. The recent rise in inequality gives us enormous room for wealth taxation. Of course, global finance won't like this. It will flee the country. So we need capital controls. But if we have capital controls, then to manage our trade deficit, we also need trade controls.
So I propose a new regime of capital and trade controls, backed by expanded domestic production and welfare. We must support agriculture, especially peasant agriculture and build internal demand. This does not mean autarky. No country can be fully self-sufficient. We need trade. But trade should be bilateral. India once had such arrangements with the Soviet Union, where deficits and surpluses were settled over time through targeted reciprocal trade and without incurring debt to international bankers.
Smaller countries should come together and form economic unions like the European Union did, so they can diversify their production structures. For large, relatively diversified economies like India, bilateral trade can meet most of our needs, with exceptions like oil.
The recent upheavals in the world economy, to me, are not a signal to renegotiate better deals with Trump. They are a chance to walk away from the existing order and create something new.'
Prabhat Patnaik on the US-China question
' Let me also clarify: I don't believe in thinking of the world as 'US versus China.' I do not want China to replace the United States as the dominant force for the Global South. Yes, China has provided assistance to many Southern countries and that's good. But fundamentally, the countries of the Global South must stand on their own.
Smaller nations should form regional unions. African countries, for instance, should move toward an economic union. India, as a large country, can also consider a South Asian union. But even on its own, India is large enough to aim for a diversified and self-reliant economy.
There is no essential commodity except oil, that India cannot produce. Abandoning food self-sufficiency, as many African countries have done, has led to disaster. Globalisation has created what Professor Romeo Bakshi calls 'globalisation famines.' Expanding our home market is the only way to absorb the vast reserves of labour we have. Export-led growth suppresses wages to compete globally. But if we grow through our domestic market, we can raise wages, which in turn boosts demand. We must stop defining development in terms of either China or the US and focus on building our internal capacity and sovereignty.'
On the unravelling of the post-War order
'Finally, on the apparent unravelling of the post-war imperialist axis: I do see rising neo-fascist tendencies across the world, including in the Global South. Argentina is one such example. This, too, is tied to the crisis of neoliberalism. So, delinking from neoliberalism economically, and from neo-fascism politically, must happen together. But this can only happen if there is a class alliance—a political movement led by the working people, peasants, and labourers. That's what it will take to push back against both these forces. When the farmers' movement took place in India, it gave us a glimpse of this possibility. Whether we seize it will depend entirely on how politics unfolds in the near future.'
Andres Arauz
On neo-Monroeism, trade regimes, and the Global South's fight for sovereignty
' I want to pick up on what's already been said – that Trump's trade measures are not the actions of a crazy madman. From the perspective of Latin America, it is clear that these moves are not erratic, but rather intentional and strategic. What we're witnessing is what many in Latin America refer to as a neo-Monroeism, which is a contemporary revival of the Monroe Doctrine, which historically claimed 'America for the Americans,' meaning, in practice, the United States.
This neo-Monroeism is evident in how Trump linked tariffs with geopolitical aspirations: suggesting the takeover of Greenland (a Danish territory), talking about Canada as a potential 51st state, and even speaking of 'reclaiming' the Panama Canal. The measures against Mexico fit squarely within this frame. From Latin America, we see this as an extension of old imperial logics.
Moreover, it's important to note that this didn't begin with Trump. The Biden administration's near-shoring strategy is part of the same trend, as were tariff and non-tariff measures during both the Trump and Obama administrations. The US-UK Free Trade Agreement includes provisions restricting Chinese participation in value chains and infrastructure. The same holds true in the updated NAFTA—USMCA—which explicitly excludes China from key regional economic interactions.
We are seeing a Monroe Doctrine that has now widened its geographic scope but continues to assert control over economic relations in the Western Hemisphere – particularly to exclude China.'
On a longstanding continuum of US trade policy
' This isn't just about Trump. The United States has used unilateral tariffs as a policy tool for decades. Under George W. Bush in 2002, under Obama in 2009 (safeguards), and then again under Trump with special tariffs on steel and aluminium, Section 301 tariffs related to intellectual property violations are all part of a continuum.
These actions include the systematic removal of the Generalized System of Preferences (GSP), including for India during Trump's first administration. This had a major impact on India's industrial exports to the US. GSP, whether in the US or Europe, has often been used as a tool of blackmail, coercing countries into Free Trade Agreements (FTAs) to retain longstanding preferences.
But FTAs are not just about tariff reductions. They include investor-state dispute settlement (ISDS) mechanisms which is one of the key offensive interests of transnational capital. These treaties also lock in commitments on issues that have failed to advance in WTO negotiations: intellectual property, procurement, services, and most recently, so-called e-commerce, which essentially protects Big Tech interests.
Meanwhile, the United States has paralysed the WTO appellate body, not just under Trump, but under Obama and Biden as well, by blocking appointments and rendering the system toothless. This bipartisan effort over nearly two decades is a planned attempt to render obsolete the very multilateral system the US helped build, replacing it with unilateral dominance.
We must also go beyond tariffs and adopt a balance-of-payments perspective. About 70% of world trade is now governed by non-tariff measures (NTMs), and these are extremely asymmetric. The institutions that set global standards such as the ISO, IEEE, Codex Alimentarius, are dominated by agencies and corporations from the Global North. It is rare to see a corporation or agency from the Global South participating in these technical committees.
These standards often become permanent trade barriers, entrenching a global technological hierarchy that favours Northern capital. This asymmetry has been in place for decades and tariffs are simply the latest chapter.
The United States is not just using trade rules. It's using financial sanctions, OFAC, and strategic exclusions to shut out Chinese service and telecom providers, not only in the US but globally. At the same time, remittances have become a lifeline for many in the Global South, while capital flight continues to be a structural feature of the system.
When countries trade with the US, they don't receive goods in return. They get dollar-denominated IOUs, US liabilities, which fuel Wall Street asset inflation. And this doesn't happen just in US trade. When Peru trades with India, the payment often still settles in dollars. This reveals the deep entrenchment of dollar hegemony, and the way financial capital profits off global imbalances.'
On intrafirm trade and the power of corporations
' Another crucial aspect is the nature of trade itself. About one-third of global trade and nearly half of US imports is intrafirm trade. That means this is not country A selling to country B. It's Corporation X selling to Corporation X, with production scattered across borders.
So, when we talk about the US benefiting from trade, we must be clear: it's not the American people, it's US-based corporations. Trump's slogans about 'America First' ignore the reality that these corporations control supply chains, manipulate pricing through transfer pricing, exploit tax loopholes, and dominate services trade through Big Tech and finance.
Services now play a major role in compensating for the US's goods trade deficit. The surplus in services, led by tech and finance, is an offensive front for US economic policy. For instance, policy tools are used to promote Starlink, Elon Musk's satellite company, and ensure the dominance of Google, Amazon, Meta, and PayPal, who push for free data flows, algorithm secrecy, and stronger intellectual property regimes.
They also exploit tax evasion mechanisms: fake royalty payments, bogus knowledge exports, and other tricks to avoid taxation and repatriate profits.'
On delinking and building southern alternatives
' Given the current context, I believe the Global South must seize this moment. We must unilaterally but in a coordinated way, think about ways to delink from the current trade regime. That means withdrawing from ISDS and creating an independent Southern finance and payments system.
The technical capacity already exists. What's missing is political will.
In closing, I invite everyone to read the Programme of Action for a New International Economic Order for the 21st Century, developed by Progressive International alongside the G77. As Prabhat Patnaik emphasised earlier, this moment of crisis is also an opportunity.
We must reject the paradigm and rules being set by the United States and come together on our own terms – terms that advance development, protect sovereignty, and ensure the rights of the peoples of the Global South.'
Ranja Sengupta
On tariffs, trade injustice and bilateral FTAs
' Trade has suddenly become a very hot issue again. I agree very much with what has already been said – this is not just about Trump – it's part of a continuum. We've seen this in US trade policy, but also in the WTO and in bilateral trade agreements. From the days of GATT through to the WTO era, the rules were always unfair and so was their implementation. Developed countries have implemented only what suits them, and have ignored the rest.
The negotiations themselves were rigged. The design of the rules was hopelessly tilted against the interests of developing countries. As pointed out earlier, the Agreement on Agriculture epitomises this inequity. We work closely in Geneva, and it's shocking how injustice has been normalised in the WTO system over decades. Countries or organisations that challenge this hegemony are seen as outliers.
What we've also seen is the quiet but major shift in which new issues have been introduced through bilateral FTAs and are now being multilateralised within the WTO. These include not just digital trade, but the future of the digital economy itself, as well as liberalisation of government procurement, higher intellectual property standards, which we know have established rights of North-based corporations and it gives them their control over technology.
It has raised, for example, medicine prices, agriculture input prices around the world. So where the WTO already had rules, we've seen these going deeper and deeper against developing country interests. Other issues, which we call the 'new issues', have been brought in through the free trade agreements. Now there's a massive push to multilateralise these in the WTO. And all the developed countries have been working in perfect alliance and partnership for this new framework to work. The rules that were already present in the WTO are now being deepened against developing countries through this new agenda.
All the developed countries are working in close alliance to build this new framework. The WTO, which has always been a power-based system dressed up with the semblance of rules, now looks more hollow than ever. The most-favoured-nation (MFN) principle, central to the WTO has been undermined, as we're seeing through US actions. Many developing country negotiators we speak to remain in the WTO precisely to avoid the kind of blatant power-based deals the US is now pushing.
But what we are now seeing is this power-based system, with its so-called semblance of rules is being completely taken apart. Trump's policy is a very extreme manifestation of this power-based system.
Some believe the WTO may implode. I worry instead that we may see a worse WTO, one where the US sets the agenda more openly, pushing rules that serve its own corporations. Trump's direction clearly benefits big business and rich countries. What we need, in contrast, is a framework that supports small farmers, SMEs, patients, and marginalised communities.
This moment could be an opportunity but only if we work hard to seize it. That means forming alliances among developing countries, building trust, sharing technology, and forging deeper cooperation. Unfortunately, developing countries today are often competing, not cooperating. Many see the tariffs on LDCs as their own opportunity, including India and it is this very attitude must be challenged.'
On tariffs and development tools under attack
'A lot of myths have suddenly emerged, as though global trade is now just about tariffs. Yes, there are many important non-tariff issues, but let's address the tariff question first.
The US has broken WTO rules: its MFN obligations and its bound tariff commitments. It justifies this on the grounds of a national security exception by claiming its large trade deficit is a national emergency. This was done during Trump's first term as well, and was challenged by several countries in the WTO. The US lost every time but with the dispute settlement system now paralysed, no action can be taken.
What's important to understand is that tariffs are a development policy tool – for which developing countries fought for during GATT and the WTO formation. When the US and EU were industrialising, they used import duties extensively—up to 50% in the US, 18–30% in the EU. Developing countries have fought to retain tariffs because they protect infant industries, enable growth, safeguard livelihoods, and preserve critical domestic production.
It is unacceptable that the richest country in the world now uses tariffs against developing countries while pressuring them to dismantle their own tariff regimes. This is deeply hypocritical. During the Uruguay Round, the WTO's foundation bargain was that developing countries would retain higher tariffs to support their development. In exchange, they accepted significant concessions: TRIPS, TRIMS, commitments in services and investment. This has now turned around with developing countries again being asked to give up their tariffs, while developed countries retain theirs.
Meanwhile, developed countries continue to use massive subsidies. The US and EU have used 'box-shifting' techniques to make trade-distorting subsidies look legal. If you look at subsidy intensity, the differences are staggering: the US gives nearly $13,000 per farmer, China around $528, and India only $236. And yet, it is developing countries that are criticised.
Standards, especially in food have been another tool of exclusion. These technical barriers have hurt farmers across the Global South. The US's reciprocal tariffs now hit even Least Developed Countries (LDCs) some of which face tariffs of 30–50%, like Madagascar. This completely reverses the principle of special and differential treatment, which was intrinsic to the WTO.
This could further intensify and this extreme reversal may spread to other developed countries. The US will demand far more than tariff cuts. There will be pressure on agriculture, dairy, cereals, meat, dry fruits, ethanol, GM foods. This could also increase pressure on pharmaceutical tariffs—India's generics industry will be targeted and face additional pressure on IP rights, TRIPS-plus, on autos, medical devices, steel, aluminium. The EU and UK have already told India that any concession it offers the US, whether on tariffs or non-tariff issues, must also apply to them. In this way, even bilateral deals will become de facto multilateral commitments.'
On BRICS and beyond
'China's resistance post-Trump offers important lessons. Unlike many countries that rushed to make concessions, China held firm—and in doing so, inspired others. But building a Southern alliance can't just mean relying on China. Many countries still view China's WTO positions with suspicion.
BRICS alone is not enough. Brazil's current agricultural policy, led by exporters, often undermines the interests of small farmers. Even within BRICS, competitive interests dominate. Cooperation must go beyond BRICS, to include broader coalitions committed to shared development goals, not just market access.
We need alliances that focus on linking production, distribution, technology, and finance and not on undercutting each other. The urgency of this moment demands that we resist, not just in tariffs but in the non-tariff areas that penetrate deeply into domestic policymaking. If developing countries cave in these bilateral deals, the foundation of any future alliance will collapse.'
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