Opinion Tariffs tracker: A plane’s U-turn and trade talks taking wing

The impacts of the tariffs continued to be felt on Sunday, with a Boeing jet meant to join a Chinese airline’s fleet returning to the US. The 737 MAX, painted in the Xiamen Airlines livery, had to come back to Seattle as American airplanes have become prohibitively expensive for Chinese companies in the tit-for-tat tariff war between the economic giants. It is not clear yet which party backed out of the decision to deliver the plane.

Airplanes, of course, are not the only object affected by tariffs. Moreover, the fact that the US policy is changing rapidly — Trump announced massive tariffs on most countries and then paused them for 90 days, except for China, which he raised twice amid retaliation from Beijing — has left the business world in a lurch, as no one knows how much a commodity could cost three months later or even tomorrow.

In India: Efforts on for trade deals with US, UK

India, in this scenario, is ramping up trade talks with Western countries, particularly the United States and the United Kingdom. A negotiating team will go to Washington DC on April 23 to push through an interim deal, and Commerce Minister Piyush Goyal will visit the UK to iron out the remaining differences in the Free Trade Agreement (FTA).

A bilateral trade deal is some protection against the shock a major economy like the US can cause to the global trading system. Thus, if the US and India seal a bilateral trade pact, India won’t be as badly affected if Trump were to reinstate the tariffs he paused for 90 days.

Indian negotiators are preparing for a three-day visit beginning April 23 to the US to draw up a “realistic 90-day roadmap” to clinch an interim agreement covering a range of issues, including tariffs, non-tariff barriers, and services.

Meanwhile, Vance’s upcoming India visit has come in for some political push-and-pull. Congress leader Jairam Ramesh, in a post on X, has asked if PM Modi will convey “India’s concerns on the complete destruction of the multilateral rules-based trading system anchored in the WTO, from which India has gained greatly…Convey India’s determination to ensure that any further bilateral trade liberalisation does not adversely impact Indian farmers, industry, and MSMEs?”

Rest of the world

On the other side of the world, a Reuters poll of economists has said the aggressive US tariff policy could “trigger a significant slowdown in the US economy this year and next, with the median probability of recession in the next 12 months approaching 50%”.

Basically, tariffs will make imported products more expensive for American customers, possibly leading to inflation. In that scenario, the US Federal Reserve — equivalent to India’s Reserve Bank of India (RBI) — won’t cut interest rates on what it lends to other banks. All this will impact consumer sentiment and demand, potentially triggering an economic slowdown.

Amid all this, big businesses in China, including Alibaba and JD.com, “are leading Chinese internet groups in launching multibillion-dollar initiatives to help traditional exporters switch to domestic sales”, Financial Times reported.

China, of course, is preparing to withstand the shock of its exports falling as its products get significantly more expensive for the US market. However, Chinese products finding buyers within its borders is good news for other countries too, which feared being flooded with cheap Chinese goods as the ‘factory of the world’ dumped its products in countries where it didn’t face steep tariffs.