In a week that saw President Trump tweet against a wide range of companies and countries, India got its own shout-out for high tariffs. India joined the European Union and China to push back against U.S. steel and aluminum tariffs, and notified the World Trade Organization (WTO) last week that it would impose higher import tariffs on 30 U.S. goods, including almonds, shrimp and chocolates.
What are the consequences for India of jumping into Trump’s trade war? Most economists assert that increased tariffs are bad for countries because they drive up the cost of goods and reduce efficiency.
The short-term revenue can be tempting
The findings of Ida Bastiaens and Nita Rudra’s forthcoming book suggest that some developing countries such as India may be especially prone to the temptation of short-term revenue that tariffs can bring. The bottom line? Poorer democracies might not find the current trade wars quite so devastating. Here are four things to know:
