Why Trump’s new tariffs matter

Donald Trump has just put in place a new rule: He imposes a 25% tax on steel and aluminum (called tariffs). These are important metals that make cars, buildings, and aircraft. India is the second largest producer of two metals, but it has not sold much to the United States, and India’s steel and aluminum businesses will feel the impact.

They may talk about this when Indian Prime Minister Narendra Modi meets Trump. Trump removed tariffs from Canada and Mexico last week, so maybe he would have a deal with India as well.

But if he doesn’t do that, it could hurt us in India. The last time Trump did this in 2018, U.S. Steel added about 1,000 jobs. But the problem is that the price of steel is rising. This makes things like cars and washing machines more expensive, so I bought them. Companies using steel are unable to hire a large number of workers, and about 75,000 new jobs have never happened.

Trump believes tariffs will help American workers, but in reality, factories are using more machines and fewer people to make things. So, who really benefits?

India doesn’t have to worry about selling metals, but should focus on something bigger – service! India is already good at such jobs, customer support and finance, and more and more businesses in the world need these services. When people have high-paying jobs in these areas, they spend more money on housing, food and transportation. This can still maintain high demand for steel and aluminum.

Therefore, India should not only rely on selling metals, but also leverage its strengths (its smart people’s labor force, growing economic and English skills) to become a global service leader. In this way, even if Trump maintains tariffs, India can still win.

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