‘We’ll Be Ruined In 3-6 Months’: P Chidambaram Warns Of US Tariffs; Urges Government to Clarify India’s Response

Senior Congress leader and former Union Finance Minister P. Chidambaram has called on the Indian government to clearly outline its response to the looming tariff war initiated by US President Donald Trump. He criticized the lack of discussion in Parliament or consultation with opposition parties, emphasizing the need for a unified strategy against the potential economic impact of US tariffs.

He expressed concerns over India’s preparedness in dealing with the unpredictable trade policies of the US. “I mean, it can’t be in uncertainty. Of course, Americans are uncertain; let’s assume so. But you must have alternative scenarios. What if they take one step forward? What is our response? What if they take two steps backward? What is our response?” Chidambaram said in an interview with NDTV.

He further alleged that even most Union Ministers were unaware of the government’s approach, questioning who was involved in formulating India’s response. “In fact, my information is, most ministers are in the dark. Who is involved in making this reactive policy to America’s uncertain policy? I don’t know. Nobody seems to know,” he added.

Potential Impact on India’s Auto Industry

The US administration’s recent decision to impose a 25% tariff on all automobile imports has raised concerns over India’s trade prospects. While India is not a major exporter of cars to the US, Tata Motors’ luxury subsidiary, Jaguar Land Rover (JLR), has a significant presence in the American market. Moreover, India’s auto component sector, which generates about 20% of its revenue from exports, will face substantial pressure, as nearly 27% of these exports are directed to the US market.

Industry experts fear that these tariffs could squeeze profit margins and disrupt the supply chain. Many worry that India’s automotive sector will face long-term challenges if no countermeasures are taken.

Government’s Policy Decisions Criticized

Chidambaram accused the government of making “impromptu, unilateral, knee-jerk decisions” in response to the US trade policies. He cited the removal of the 2% tax in the Union Budget and the recent elimination of the 6% digital service tax, known as the ‘Google tax,’ as examples of hasty concessions made to appease the US.

“If you don’t wish to have a public discussion in parliament, then you should at least invite the principal opposition parties which are represented in parliament and take leaders into confidence of what alternative scenarios are being worked out,” he urged.

Concerns Over Government’s Lack of Coordination

Chidambaram also raised concerns about a possible lack of coordination among key ministries handling trade policies. He suggested that apart from the External Affairs Minister and the Commerce Minister, other ministers may not even be aware of the unfolding trade situation.

“I think at the moment, only the external affairs minister and perhaps the commerce minister who went on a delegation to the US are privy to what is going on. I don’t think other ministers know. I’m sure the agriculture minister does not know. I’m sure the industries minister does not know. But they are making concessions? I don’t know. Are you making concessions on agriculture? Are you making concessions on industrial goods? Are you making concessions on intellectual property? I don’t think anybody knows,” he stated.

Need for a Global Strategy Against Unilateral US Tariffs

Chidambaram emphasized that India must align itself with other countries that are also being impacted by unilateral US tariffs. He highlighted the importance of global trade agreements and World Trade Organization (WTO) rules to counter arbitrary tariff impositions.

“There are WTO rules; there are multilateral and bilateral trade agreements; there are international laws and conventions. So if you want to rewrite the tariffs of several countries, you must hold a discussion. This is what Prime Minister Mark Carney of Canada is doing. He has taken his parliament into confidence, at least the leaders into confidence. And he says we will coordinate with the European countries and respond to Mr Trump’s unilateral tariffs,” he said.

He also warned that if India does not proactively form alliances with other affected countries, it could be singled out by the US, leading to severe economic consequences.

“Suppose he picks India, and he leaves other countries out. Suppose President Trump picks India and says, ‘these are the tariffs from goods exported from India,’ we’ll be ruined. In a matter of three to six months, our economy will be ruined,” Chidambaram warned.

He reiterated that Trump’s strategy appears to be isolating countries one by one, forcing them to comply with unilateral tariff structures. “I’m afraid Mr Trump is not going to group all the countries together and impose universal tariffs. He’s giving a number for each country, what they have calculated, I’m told, calculated as the average weighted trade tariff. And he’s going to pick one by one and force them to surrender,” he said.

Call for Immediate Action

Chidambaram’s statements highlight growing concerns over India’s trade future and the need for a well-planned, transparent policy to counter US-imposed tariffs. He stressed the importance of unity and preparedness to ensure that India’s economy remains stable in the face of escalating global trade tensions.

As the US continues its tariff war, all eyes will be on the Indian government’s next move. Will India develop a strategic response, or will it remain reactive in the face of economic uncertainty? The coming weeks will be crucial in determining the country’s trade future.