'When We Can Survive 50% Tariff, We Can Survive Anything!'

'It's very important for India to retain its sovereignty. India should not sign any agreement which compromises its sovereignty.'

"Future trade is likely to be driven by multiple power centres rather than a US-China duopoly," Ajay Srivastava, Founder, Global Trade Research Initiative, tells Rediff's Shobha Warrier in the concluding part of a two-part interview.

• Part 1 of the Interview: 'US Thought They Could Pressurise India'

Now that the deal has failed, how much will it affect India's trade? For example, exports.

Last year, for many months the US had imposed as high as 50% tariffs on many Indian goods.

And our monthly exports were down.

But when I looked at the exports for total fiscal year for 2026, I found that Indian exports to the US were 3% higher than last year, despite the 50% tariffs.

So Indian exports did not suffer because of high tariffs.

Now, America cannot impose those tariffs because the US supreme court disallowed them.

All they can do is to impose some Section 301 tariff that will be against so many countries.

Suppose 20% tariff is imposed on 50 countries, then there is this equality of disadvantage.

When everybody will have the same disadvantage, it will not hurt India too much.

It will hurt, but it will not be massive.

When we can survive 50% tariff, we can survive anything!

More than the exports, the problem is what we are committed to do.

We are committed to open substantial part of industrial goods, many of the agricultural goods, then agreed to buy $500 billion of goods from America in 5 years.

The moment $500 billion commitment becomes legal, the moment you sign that agreement, rupee will be under tremendous pressure. It is already under pressure.

There is one more thing. India said it will be aligning its security and economic policy with America. That's very bad.

Suppose America has enmity with Iran or China or Russia, why should they become our enemies?

India's Trade Resilience

Now that Malaysia has walked out of the trade deal with the US, and many European countries are raising their voices against America after the war on Iran, where will this put America in the global trade scenario?
Do you think the world has started standing up against the US?

More than the world, only China and Russia stood against them. And Iran also.

The rest of the world agreed to whatever Trump said. Europe, Japan, South Korea, all of them signed one-sided deals with US.

Now, they will have a tough time explaining those deals to their domestic audience.

Only China, Russia and Iran stood up to Trump while all the big economies surrendered to Trump.

More than the world, the US' own internal systems like the US supreme court evaluated the law properly.

Only they inflicted major blows to Trump's policies. Only the supreme court said his trade policies were illegal, and outside of the law. That was what changed everything.

'In One Year's Time Or Later, We Will See Some Big Geopolitical Changes'

What I meant was, after the war on Iran, the attitude of many European countries has changed. Will this also change the global trade scenario?

Yes, now Europe says the US cannot protect us, so NATO should be realigned.

The Gulf countries are saying they were attacked by Iran because the US had military bases there. Now, they don't want American bases on their land.

Yes, everybody is reacting.

The moment this reaction goes beyond a certain point, then it will be a major blow to American hegemony.

Forget about trade. Right now only 3-4 countries are talking like this.

The moment 20 countries come together, for example Europe, China and the Gulf countries, together voice this thing, Japan will immediately jump the ship as they are not happy.

See, American hegemony started after the Second World War.

It's a long enough time for a change.

And changes are happening.

The US was alone at the top till now. Now they themselves are recognising G2, the US and China. Soon, many more countries will be there.

Maybe in one year's time or later, we will see some big geopolitical changes.

'Dollar Will Be Under Tremendous Pressure'

What kind of realignment do you see?

In trade, you can see the dollar sliding.

When the world starts buying oil in any currency of its choice, then the dollar will be under tremendous pressure.

The moment the dollar is under pressure, the US cannot print and throw dollars on the world.

Right now, they don't have to earn the dollar. We have to earn the dollar.

That's why they can print dollars. The moment the dollar is under question, then their total economy will be under tremendous strain.

The moment the US economy is under strain, they will not have sufficient money to spend on defence and so many wars.

What are they doing now? They are spending unlimited money on defence and wars.

Once other countries see the dollar weakening, we may see many changes.

IMAGE: Ajay Srivastava.

Many countries are signing bilateral trade agreements. Will put pressure on dollar?

No. Bilateral trade agreements are there, but still invoicing is done in dollars.

For example, India's trade to the US is just 20% of the total trade but 90% of our invoicing is in dollars.

But the moment the dollar weakens, we will start invoicing more in euros and yuan and dirhams and other currencies. That will really hit the dollar.

'People Don't Trust China'

Where do you see China in the global trade map? China has access to almost all the markets.

Acceptability of China as a global leader is very low. People don't trust China.

Like people trusted American institutions, people doN't trust China.

China is very valuable because they make 30% of the world's manufactured goods.

They are at the top of most of the supply chains, be it electronics, machinery, organic chemicals...

Everybody needs Chinese products. But beyond the products, nobody wants to accept China's soft power.

So, what you are going to see is a multipolar world.

The US will be there, China will be there, Japan will be there, Europe will be there.

It will not be a bilateral G2 world. It will be a multipolar world.

We may see this change within one or two years.

That's why it's very important for India to retain its sovereignty. India should not sign any agreement which compromises its sovereignty.

Feature Presentation: Rajesh Alva/Rediff