It is worse than anyone had expected. The tariffs slapped on practically every country and territory by the United States have caused consternation globally and the effects are going to be felt hard by people everywhere and for years to come.
Surely not in Meghalaya? But, yes, here as well. The world economy is so inter-connected these days that even our poor, largely rural state will be affected.
It is highly doubtful that Meghalaya exports much to the USA, so the tariffs are unlikely to directly affect the state. However, there will be indirect effects. Take, for example, the stock market. India’s NIFTY 50 and SENSEX indices lost 1.49 percent and 1.22 percent in value on Friday. Further losses are possible when the markets reopen on Monday, taking their cue from US, European and other Asian exchanges, where billions of dollars in value have evaporated in the last couple of days.
While the number of Meghalayans who invest in the stock market is probably small, the middle and even working classes are constantly being encouraged and cajoled into investing through mutual funds and the like.
Furthermore, there is now an increased risk that the global economy will enter into a recession by the end of the year. This could affect Meghalaya in a couple of different ways – a weaker economy could lead to fewer visitors to this tourism-dependent state and the central government and international funding bodies could scale back spending on projects that Meghalaya is depending on to lift itself out of poverty.
Is it all doom and gloom? Not necessarily. There seem to be two approaches that global leaders are taking to the Americans at the moment – kowtow, flatter and beg them to lift tariffs or defiantly retaliate with levies on US goods. So far, India has adopted the former approach. If such a strategy works, the country might be able to overturn some of these tariffs.
Some analysts have also suggested that India could gain if it leverages its lower tariffs against the likes of Bangladesh, for example, which has been slapped with higher taxes on its products. However, moving manufacturing from one country to another will not happen overnight and may not make sense to the number crunchers.
India could also benefit if it and the rest of the world uses this challenge as an opportunity to become more integrated and more open to trade. The question there is whether India can find markets elsewhere to make up for the loss in American demand.
The country also has to be cautious that it does not become a dumping ground – facing US tariffs, companies from China (for example) could send their already manufactured goods to India and undercut domestic suppliers. The opportunities to make something good out of this major bump in the road of free trade exist but it is the challenges that abound and that is what has everyone worried.
