India and Brazil joined handsImage Credit source: gemini
The strict trade policies of US President Donald Trump have created panic across the world. The two countries that have been hit the most are India and Brazil. Now these two countries are coming closer to each other and are preparing to move forward together.
In fact, America imposed heavy tariffs on many goods from India and Brazil. Tariff (Import duty) has been imposed. Due to this both the countries are suffering losses in their trade. For this reason, now India and Brazil have started looking for new markets so that the impact of American tariffs can be reduced.
This week, government officials and big business leaders of India and Brazil are meeting in New Delhi. Both countries want to increase mutual trade three times to more than 12 billion dollars.
Economists believe that if Trump’s policies continue like this, the economic growth of India and Brazil may decline by about 1%. In such a situation, both the countries are now trying to avoid that loss by supporting each other.
New strategy of India-Brazil is being made in Delhi
A big meeting between India and Brazil is going on in New Delhi this week, in which a strong and special delegation of Brazil is participating. This team is being led by Brazilian Vice President Geraldo Alkmin. Along with him, top officials of some big companies of the country are also present like oil company Petrobras, mining company Vale SA, and food processing company BRF SA.
The purpose of this meeting is not just to hold formal talks, but the real focus is to build a strong and long-term partnership with India in agriculture, biofuels and defence. The effort of both the countries is that trade relations should not be limited to mere avoidance of tariffs, but together they should emerge as a new global power.
Brazil and India are also considering how to make the ‘MERCOSUR-India’ trade agreement signed in 2004 more effective. There is talk of increasing the scope of this agreement so that the path of both trade and investment becomes easier in the future.
PM Modi and Lula are keeping distance from America
The closeness between Indian Prime Minister Narendra Modi and Brazilian President Luiz Inacio Lula da Silva is telling a big story of today’s changing world. The reason is America’s changing and strict policies.
Under the leadership of Donald Trump, America has set aside old trade deals and decades-old trusted relationships. The result is that now many countries of the world, especially emerging economies, have started looking for new strategies and partnerships. India and Brazil are also included in these.
The Trump government’s ‘America First’ policy has created such an environment that now countries are forced to rethink their respective trade and diplomatic paths. While India has tried to melt the ice in relations with China, Brazil is also exploring its options. Although both Modi and Lula are still trying to maintain good relations with America, they are also making a backup plan so that if America’s policy becomes more stringent, they do not remain completely dependent.
Thiago de Aragão, head of Washington’s well-known policy consultancy ‘Arco International’, says, Trump’s trade war has changed the equations of trade around the world. All the countries want to resolve their issues with America, but they also fear that this thinking may last a long time.
How India and Brazil got trapped by America’s tariffs
Ever since Donald Trump took command of America, India and Brazil have suffered a huge trade blow. America has imposed a tariff (import duty) of up to 50% on many products of both the countries. This is so much that their exports are directly being affected.
Later, America definitely gave some relief, hundreds of Brazilian goods got exemption and India’s pharmaceutical and electronics sector also got some relief. But the damage that was to be done has already been done and the danger still remains.
Talking about Brazil, about 12% of its total exports go to America. Now if the demand for its major products like beef and steel decreases in America, then Brazil’s economy may face a big blow.
India’s situation is even more critical. America is its biggest export market. About 20% of India’s total exports go to America alone, of which electronics, jewelery and medicines are the major ones. In such a situation, the tariff conflict with America is a cause of great concern for India.
In the last few months, Brazil has shifted some of its goods from America to Argentina and China. But Brazilian officials believe that if anywhere has the greatest potential for growth, it is India. Therefore, now Brazil is busy in deepening its relations with India so that a new path can be prepared out of this storm of tariffs.