New Delhi

Don't mistake a dealmaker's bluster for a sword-fighter's jab.

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That could well be a guiding principle for those trying to decipher the planned increases in import tariffs announced by US President-elect Donald Trump especially on China, Mexico, and Canada -- though his loud words extend to India.

You have to read not just the fine print but also separate the rhetoric from ground realities on an issue that is not as open-and-shut as it seems from headline statements.

Also read | ‘They tax us, we tax them,’ Trump issues fresh threat to India over ‘high tariffs’

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It can certainly be said that Trump is trying to change the global trade game as the US struggles with a trade deficit mountain that harms its overall economic well-being (the federal budget deficit is a bigger problem). But global trade as well as American consumerism are joined at the hip. A good swing here could mean a bad swing there. Furthermore, Trump's bravado is not just about merchandise trade.

It involves positions and outcomes on illegal immigration, supply chain linkages between products compositely manufactured in various parts of the planet, and macroeconomic factors such as foreign exchange rates and interest rates. No one is going to suffer this disruption alone -- though indications are that the whole tariff game contains more gain than pain for India.

However, China's toolkit as well as its famous ability to show some shrewd gestures make it more complicated.

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What we can expect is a slow-grinding set of adjustments after an initial round of fireworks that would indicate where the game is going.

We also need to do some trade calculations specific to industries. It is all up in the air. Trump, being a real estate tycoon more than a militarist nationalist, is likely to use power to cut better deals than take wounds on the economy he is steering.

I do think one factor that is not being discussed loudly but needs to be is the strange business of high technology that actually gives the US a pivotal economic strength.

Also read | Trump's proposed 25% import tariffs loom large over US automotive sector

My assessment is that industries such as computers, software, the Internet, and the emerging spectre of artificial intelligence cannot be subject to Trump's simplistic approach. Imagine Trump cracking down on the manufacturing industry of a country but instead facing retaliation that could hurt Google, Microsoft, Netflix, Facebook, or Amazon!

Republican Trump's Make America Great Again (MAGA) campaign may boomerang on the very giants of US dominance in global trade if he is not careful enough.

The President-elect has said he would sign an executive order imposing a 25 per cent tariff on all Mexican and Canadian imports and an extra 10 per cent on Chinese goods as soon as he takes over at the White House in January. But his swipes at Mexico and Canada are perhaps less about the US trade deficit and more about illegal immigration.

That is a classic apple-and-orange conflict in which Trump may want to extract security-linked gains in exchange for elbow room in trade. But there are also aspects linked to the North American Free Trade Agreement (NAFTA), which is where the Trump tariffs might hurt Mexico and Canada.

We just have to wait and watch as this is not subject to conventional trade dynamics. Leaders of both Mexico and Canada have already indicated a mood of reconciliation. It would be wiser to expect a deal than a war.

The general belief that US inflation rates may surge if cheap Chinese (or other) imports are restricted will certainly be a factor. Trump may not be in a hurry to spite US consumers even as he tries to keep his promise to strengthen the American economy. The US economy is doing pretty well in terms of jobs with the current unemployment rate well below the long-term average.

Also watch | World Business Watch: China steps up stimulus to recharge growth ahead Of US tariffs

The tangle with China is more intriguing and interesting. The US had an overall trade deficit of $773 billion in 2023 of which China accounted for the lion's share of $279 billion. But then, China's foreign exchange reserves at $3.265 trillion are more than 10 times the deficit figure. In plain language, Beijing has deep pockets to fight a trade war if needed.

It is now warming up to a BRICS alliance of Brazil, Russia, India, China and South Africa to dig its heels. China also has the option of strategically devaluing its currency -- long overdue after decades of strengthening its reserves with a state-controlled overvaluation.

From toys and furniture to nuclear reactors, China's dragon grip on US consumerism is strong. If America's consumers show withdrawal symptoms after decades of cheaper imports to aid profits and lifestyles, Trump may have to show some patience.

India is a potential gainer with a "China Plus One" strategy under which the US as an importer would systematically reduce the Chinese grip, but this would be a lot slower as India needs to build capacities and prove its capabilities on a large scale in which China is decidedly a leader of sorts.

Speaking earlier this week, Trump appeared to target India as well, though his words seemed rhetorical, as he talked of a "reciprocal" tit-for-tat tariff action.

"If they tax us, we tax them the same amount. They tax us. We tax them...Almost in all cases, they're taxing us, and we haven't been taxing them.”

Is that a warning shot? On paper, India stands to gain as a long-term alternative to China in industries such as textiles, pharmaceuticals and electronics, but some token action that hurts some Indian industries cannot be ruled out. On the other hand, if China withdraws some export rebates in solar panel components as part of a trade adjustment with the US, India could get caught in the middle with higher component costs. China is also a dominant supplier of laptops and smartphones worldwide, and they have both business and consumer value that makes targeted trade attacks difficult to enforce.

My guess is that Republican Trump will have his hands full in addressing some key domestic issues that target rival Democrats and an alleged "deep state" to please supporters and aides who include arch-conservatists on the loony fringe.

Whatever the details, it is going to be an uncertain 2025 for all. Whether Trump acts fast, slow or with gingerly strides, there is no denying that the US is an influential economic superpower. Few would be in the mood to do business as usual without looking over their shoulders as Trump weighs in with his tariff strategy.