Savitha Suresh
Assistant Professor, DME
U.S. President Donald Trump’s recent announcement of a minimum 10% tariff on all imported goods, alongside higher tariffs on countries like China, has reignited global debate on protectionist economic policies. While these tariffs aim to safeguard domestic industries and address trade deficits, they also pose significant risks, such as increasing consumer prices, disrupting supply chains, and straining international trade relations. Recently, at the DME MUN, I had the opportunity to sit on the expert panel discussing the “Role of Economy and Trade in Navigating Geopolitics”, where this issue was discussed in great detail.
Tariffs function as indirect taxes and are closely tied to a country’s broader tax philosophy. A well-structured tax regime is essential for economic growth, equitable wealth distribution, and policy stability. Trump’s tariff-centric approach, while politically strategic, highlights the dangers of using tax tools for short-term economic gains rather than sustainable development.
Trump’s current trade policies however, are reflective of the shifting political coalition on the global scale, with the policies finding strong resonance amongst limited segments of the American electorate, particularly those in regions with manufacturing-heavy industries that have consistently experienced an economic decline since COVID-19.
However, this relief is short lived, and while some domestic industries in the United States, like steel or aluminium, have initially benefited from these tariffs, most downstream industries that rely on imports from these countries have seen a significant increase in costs, potentially necessitating cost-cutting measures that may lead to large scale unemployment in these sectors.
A progressive tax structure that supports both growth and equity is essential, and while protectionist tariffs may offer short-term relief, they can isolate economies in the long run. The American economy, if isolated, will collapse. Post World War II, America placed an extraordinary emphasis on national security, and they attempted to safeguard their national security by making the dollar the international currency of trade. This in turn made domestic manufacturing extremely expensive.
So the fact is, that while these tariffs may produce limited benefits in the short term, in the long run they are unsustainable and will render the American economy unsustainable, leading to the collapse of the dollar, and ultimately resulting in another recession. Therefore, it was my considered opinion that taxation policies must serve long-term national interest rather than short-term political agendas, and these tariffs, while an efficient tool for commencing a global trade war, serve no useful purpose in securing the stability of the global economy in the long run.
Platforms like this MUN at Delhi Metropolitan Education are crucial in nurturing such critical thought and encouraging students to explore real-world implications of fiscal decisions. As we nurture future professionals, it is our responsibility to advocate for a fair, transparent, and growth-driven tax system that not only empowers domestic industries but also upholds global economic harmony.
