The United States’ latest decision to impose additional tariffs on Indian exports will disrupt the flow of trade between the two countries. Indian exporters, unable to fully absorb the added costs of US tariffs, will be forced to raise prices, hurting competitiveness. This, in turn, will dampen bilateral trade volumes. But the greater damage may be intangible — a breakdown of trust between businesses, policymakers, and governments on both sides.

When tariffs become unpredictable in timing and size, they signal a departure from rules-based trade. Such uncertainty nudges countries toward forming trading blocs, moving away from multilateral frameworks that promote global welfare through efficient resource allocation.

Read more