According to most dictionaries, ‘tariff’ is a noun and means a tax on imports into a country. Sometimes, there is a tax on exports too. Very rarely, ‘tariff’ is used as a verb, but such use is now more common thanks to President Donald Trump. He has ‘tariffed’ most countries of the world including two islands — Heard and McDonald — where the only living creatures are penguins, and the penguins export nothing to the United States. Mr Trump believes that stiff tariffs on goods imported into the U.S. will ‘Make America Great Again’ (MAGA). On April 2, 2025 he unveiled a table of tariffs. As the table unraveled, it became clear that the ‘calculation’ of tariffs was based on a simple formula that was adopted to make sense to simpletons. The tariff for a target country was one-half of the trade deficit with the target country divided by the value of the goods exported to the U.S. by the target country. Story continues below this ad In 2024, it was Republican red in the vast swathe of America between the two coasts minus four states. The 2024 American presidential election was reduced to one question: who will win the seven swing states or most of them? Mr Trump won all the seven states of Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin, and took their 93 electoral votes. Mr Trump’s constituency is the seven swing states. They share common characteristics: de-industrialized, high unemployment, and political discourse around issues like inflation, immigration and white male industrial workers’ preferences. Since Mr Trump won all the seven states he believes that the issues that concern the seven states are the issues that concern the United States and he is obliged to address those issues. In the 80 years since the end of the Second World War, the world has greatly benefited by the free movement of labour, goods and services, and the greatest beneficiary-country is the United States. It is the wealthiest, mightiest, most innovative country in the world. It has among the best companies, best universities, best laboratories and best athletes of the world. The U.S. dollar is universally accepted and is the world’s reserve currency. The U.S. green card and the U.S. passport are the most coveted documents. Most countries, including China and India, invest significant portions of their foreign exchange holdings in U.S. bonds making the U.S. the only country in the world that does not worry about the fiscal deficit. Unfortunately, the only people who apparently believe that all these ‘superlatives’ have brought no benefit to their lives are the voters of the seven states. Mr Trump is loyal to them than to facts. Vigorous Push Back Mr Trump’s decision to throw a spanner in the works has far-reaching consequences. Immigration of talent into the U.S. will be slowed if not halted. Trade in goods will be hit severely and supply chains will be disrupted. Trade in services will suffer setbacks, at least temporarily. Capital flows will take time to adjust to the new regime of tariffs and counter tariffs. Some services will follow capital and be interrupted. Story continues below this ad Many developed countries have behaved with admirable restraint in the face of Mr Trump’s unilateralism. It is obvious that Mr Trump is deluded and bluffing. He and the American people cannot afford high tariffs on goods imported into the U.S. and consumed by the people. There will be supply disruptions, inflation and lost jobs. Americans will be angry, and even the MAGA-Americans will feel the heat of inflation. Thousands have already come on the streets of America’s big cities. If inflation and unemployment rise, more thousands will come on the streets. Mr Trump will retreat when his bluff is called, as he did on April 9 when he hit the ‘pause’ button for all countries except China. There will be more twists and turns in the story. Mr Trump will watch two things: the way MAGA-Americans respond and the yield curve on U.S. bonds. When both turn against him, he will unashamedly flip his policies. Economics Will Prevail On the receiving end, Canada and Europe have remained strong, determined and responsible. China is adamant on counter tariffs. If the U.S. forces a tariff war, China will not retreat. India has not commented on the tariff war and has chosen to pursue a trade deal with the U.S., but India cannot give the impression of pusillanimity. Nor can India pretend it is not concerned with what may happen to the world’s economy. India must take a stand. Ms Ursula von der Leyen, Mr Mark Carney, Mr Keir Starmer and some other leaders are the examples India should follow. Mr Trump’s pause on tariffs has given the world some hope to believe that economic sense will prevail on him. However, if Mr Trump revokes the ‘pause’ and re-imposes the tariffs he had announced on April 2, he will upend the world’s economy. Most economists predict a global recession. For India, the worst than can happen is a bitter mixture of a recession, inflation, lower exports and lower FPI and FDI. India must choose its allies, expand trade with them, and push back on Mr Trump. Eventually, the laws of economics will defeat Mr Trump. At that moment of victory India cannot be seen standing with the loser.