As Trump’s tariffs threaten WTO, can India play a role in restoring order?

With Donald Trump returning to the White House, the global trade order faces its most serious crisis in decades. On July 10, the US imposed a 25 per cent unilateral tariff on Indian exports, followed by similar actions against South Korea and Brazil. As the world watches the unraveling of the World Trade Organization (WTO), we speak to Prof. Petros C. Mavroidis of Columbia University, a global authority on trade law, about Trump’s tariff blitz, the silence of major economies, and the uncertain road ahead for countries like India.

How do you characterise the current moment in global trade, particularly after the US announced a 25 per cent tariff on Indian exports?

We are in uncharted waters. Nothing like this has happened since the inception of the global trading system. The WTO was built to provide certainty in trade transactions. That certainty has been eroded since January 20. What happened to India is similar to what happened to other WTO members.

Also read: Trump tariff shocker leaves Indian stocks, exporters scrambling

On April 2, US President Trump announced a set of unilateral tariffs, which he suspended but warned he would reinstate if no deal was reached. We don’t know how many of these negotiations were in good faith. The US is calling some outcomes "framework agreements" and others unilateral tariffs. These are not WTO-compatible agreements. They're bilateral and discriminatory. For example, basmati rice from India is taxed at 25 per cent, from the EU at 15 per cent, and from the UK at 10 per cent. This is against the spirit and letter of the WTO.

What should countries do now? Should India negotiate with Trump or take a different path?

It’s hard to say where we go from here. Even EU Commission President Ursula von der Leyen recently claimed there was "certainty" in transatlantic relations, but there's no signed agreement, just verbal promises. So no one really knows what happens next.

Also read: Higher tariffs to impact US more than India: SBI Research

Is negotiation the right approach? It depends. Trump is exerting bargaining power bilaterally. Countries like India, China, Brazil, and the EU should have come together on April 3, the day after the tariff announcements, and said: we will not accept this. That didn’t happen. Everyone pursued their own deals, hoping to suffer less damage.

Has India undermined potential coalition-building by announcing bilateral understandings early on?

Yes, India, along with the EU, China, and Brazil, should have led a coalition against unilateralism. Instead, none of the leaders of these four even tried. Everyone scrambled for a deal, and as Benjamin Franklin once said, if we don't hang together, we shall surely hang separately. That’s where we are.

Also read: Trump imposes new reciprocal tariffs on over 70 nations; Syria, Canada, Brazil face steep taxes

But China responded differently, right?

Yes. China retaliated, filed WTO complaints, and called out the bullying. Ironically, China is now the only major power that hasn’t made a bilateral deal with the US. It is strange that the survival of the WTO may now depend on China. We’ll have to wait and see how long that lasts.

What’s worrying is that the WTO is completely absent from all these bilateral arrangements. Big players like the EU, Japan, Korea, and the UK have made deals with no mention of the WTO. It’s as if the WTO no longer exists.

Do you think going back to Trump to seek relief would work for India?

No, I see no reason to believe it would. Take the USMCA, the formal trade agreement with Canada and Mexico. Trump still imposed tariffs on both, despite a signed deal. So how much faith can you place in an unwritten, verbal agreement?

Would it have been wiser for India to rally countries rather than plead with Trump?

Absolutely. The response should have come on April 3. I don’t blame only India; I blame the EU, China, and Brazil too. All of them should have defended the rules-based system. Instead, in Geneva, we are discussing WTO reform while basic principles like non-discrimination are being thrown out.

What is the future of the WTO in such a situation?

The WTO has two functions: promote non-discriminatory trade and enforce agreements. Both are currently non-functional. Many trade deals are now discriminatory, and the WTO’s enforcement mechanism is crippled — there’s no appellate body.

Some believe Trump is just a phase, and the next US administration will return to multilateralism. I’m sceptical. The best alternative now is for countries that believe in a rules-based order to build a new institution.

You and Henry Korn wrote an article suggesting the WTO and US should part ways. What was the argument?

It wasn’t anti-US. If any country undermined the non-discrimination principle, we would have said the same. The WTO must stand for rules. If a member violates those core principles, coexistence becomes impossible. You cannot have both a non-discriminatory system and behaviour that negates it. That’s a zero-sum game.

So the WTO risks becoming irrelevant if the US remains inside while violating its principles?

Exactly. Ursula von der Leyen recently celebrated a deal with the US while also calling for new alliances with CPTPP nations around the Pacific. That tells you where Europe’s thinking is headed — towards a new non-discriminatory global trade bloc. India should be a part of that.

If a new coalition is built to counter the US, should China lead it?

We are now in a multipolar world. The US is no longer a hegemon. This is a historic opportunity for India to stand up and be counted alongside China, Brazil, and the EU to protect the rules-based system.

What should we learn from Trump’s decision to impose a 50% tariff on Brazil based on political reasons?

It’s disturbing for two reasons. First, Brazil doesn’t even run a surplus with the US, yet it was targeted. Second, the rationale — that Bolsonaro was mistreated — is politically motivated and violates the rules of global trade. The WTO was never meant to be a tool for punishing countries over domestic political matters. If that’s the precedent, the entire system is undermined.

(The content above has been transcribed from video using a fine-tuned AI model. To ensure accuracy, quality, and editorial integrity, we employ a Human-In-The-Loop (HITL) process. While AI assists in creating the initial draft, our experienced editorial team carefully reviews, edits, and refines the content before publication. At The Federal, we combine the efficiency of AI with the expertise of human editors to deliver reliable and insightful journalism.)