Link to the article: https://timesofindia.indiatimes.com/business/india-business/will-gst-rate-cuts-help-counter-trumps-50-tariffs-indias-gdp-growth-may-even-go-up-heres-why/articleshow/123701596.cms
With Donald Trump’s new Tariffs it has been harder for countries like India to get their products and resources across, slowing economic progress. However, India has found a way to counteract the 50% tariffs Trump has set by using GST rate cuts. These tariffs threaten Indian exports but policymakers believe that lower domestic taxes can simulate consumption, attract investment, and offset lost trade revenue. Finance Minister Nirmala Sitharaman has guaranteed citizens that the GST cuts will not harm public finances since the stronger demand will compensate. Some people believe that rate reductions would help neutralize the adverse effects of the tariffs. Ratings agencies like Fitch and ICRA have raised India’s growth outlook to around 6.5% crediting their tax cuts and India’s strong home grown demand for helping keep the economy on track.
This is a key turning point in India’s economic stability as on top of countering the U.S tariffs the country is also strengthening its internal economy. It proves that India is more independent than we thought and should not be taken lightly. Other countries are resisting or being forced to rely on other strategies, adjusting supply chains, or retaliating with their own trade measures. This issue is directly affecting lower income countries, they usually export more goods that are tariffed and have fewer alternatives. India has the highest population on the planet and being able to strengthen their economy so quickly means that they are more powerful and can be considered a more dangerous country not by military but by economic output. This gives India more recognition as well as more money making them a more respected and more powerful country.
To counter India’s tariffs, the United States would raise their tariffs even higher. Another thing that the U.S. could do would be to drop the tariffs creating peace in the trade world however it is unlikely that we will see this as it goes against Trump’s goal of trying to make America a more self reliant country in the trade world. If Trump does raise the tariffs India will be hit hard in their middle class businesses, meaning they could go into debt and lose lots of money. However India is also beginning to build alliances with other governments in Europe, Asia, and Latin America, with the common factor of disagreement on the U.S. tariffs.