As a dyed-in-the-wool, card-carrying classical liberal, it is distressing for me to watch the insanity of the “trade wars” that Trump has unleashed around the world. He is a self-centered, myopic, stupid, uncouth ignoramus. His economic policies are not good for the US, never mind the world.
However, the US is a very rich economy. Although it will be hurt by the perverse tariffs that Trump has imposed on it, the US economy will weather those insults. This too shall pass.
Trump’s tariffs don’t make sense. But what’s worse is that he appears to think that the tariffs are paid for by the exporting countries. I would fail any Econ101 student who doesn’t understand that consumers pay the majority of the tariffs because a tariff is indistinguishable from a sales tax. The incidence of a sales tax is primarily on consumers, not on producers— domestic or foreign. Same goes for tariffs.
India is not in the same league as the US. India is poor. Though it’s the largest country in the world, it is economically extremely weak, and therefore cannot afford the damage that stupid economic policies do to it.
In terms of nominal per capita GDP, the IMF ranks India 137 out of 191 countries (squeezed between such economic powerhouses as Angola and Ivory coast.) Indeed the reason for India being so poor—about 140 million Indians suffer extreme poverty—is precisely because Indian bureaucrats and politicians are either evil or stupid, or most likely both.
It’s reported that Modi has recently advised Indians to only buy locally made products during the upcoming festival and wedding season. Not that I have any objection to that — provided people freely choose to do so. Mohandas Gandhi also insisted Indians do that. Be patriotic. Be nationalistic. Be self-sufficient. Buy swadeshi.
I have no objections to being advised to do something. What I object to is being coerced. I don’t like being told what I must do and I don’t wish to tell others what they must do. Do as you wish should be the law.
I am not surprised at Modi’s reaction to Trump’s policies. Both appear to be birds of a feather. Aside from the fact that they don’t understand basic economics, they also have the additional constraint that they have to appeal to their equally ignorant voters. They have to, regardless of whether they believe it to be true or not, say what their voters want to hear.
So it is clear that Trump is in good company. Gandhi could as well be his economic advisor on trade. Modi appears to be Trump’s twin separated at birth.
But seriously. What lies at the core of this insanity that both Trump (the leader of the richest economies of the world) and Modi (the leader of one of the poorest economies of the world) push?
One word: mistrust.
Gandhi, Modi, Trump — they all share a mistrust of people. Their mantra appears to be, “I am smarter and wiser than you. Therefore I have the right to force you to do what I know you ought to do.”
I began this piece with a confession of being a classical liberal. That entails a belief in the autonomy of the individual. Live free or die, as the motto of New Hampshire proudly proclaims.
The French phrase laissez-faire from the 18th century CE is significant in the context of freedom. The literal translation is “allow to do,” which means “let people do as they choose.” It expresses a sentiment that should be the foundational principle of a free society. Old world liberals like David Hume, Adam Smith, et al were proponents of that idea.
That ideology of freedom found fertile ground in the then newly formed United States of America. Thinkers and activists in the US advocated for individual freedom. Freedom from what or whom? Freedom of the individual from the state, from the government.
The government is the enemy of individual freedom. How can we be confident that the government is the enemy? Simple: the government does not trust the individual.
Is there mutual trust among you and your friends? Of course. Do your enemies trust you? No, they don’t. If at every opportunity the government mistrusts you and takes away your freedom to choose, doesn’t that tell you that the government is your enemy?
India is a shining example of the claim that the state is the enemy of the people. Until August 1947, the state was the British Empire. After that the state was the Indian government. Nothing of any consequence changed after India got “freedom.” In what sense is a country free if the people don’t have freedom?
In 1991, there was a lot of talk of “economic liberalization.” There’s that word — liberal — again. The economy was said to be partially freed. Freed from what? From state control. Ah, so the state was the enemy of the economy!
But here’s the main point. The economy is nothing if it isn’t about people. An economy is simply people producing, exchanging, and consuming goods and services. Liberalizing the economy therefore means liberating people from dictation by others.
People should be able to freely produce whatever they are able to, trade whatever they can with whomever, consume whatever they can afford to. Liberalization pertains to individual persons, and only by extension does it refer to abstractions such as “the people” and “the economy.”
Abstractions are useful but we must not forget that abstractions are not real. There’s no such real thing called the people; there are individuals that form collectives. There’s no such thing as the state; there are individuals who constitute the state.
Countries don’t trade with other countries. People (and associations of people such as corporations) trade with other people. The US doesn’t sell corn to China; US farmers sell corn to Chinese consumers.
Now back to trade. We trade because trade makes us better off. Barriers to trade makes us not as well off as we could potentially be. Free trade is when there are no artificial barriers to trade. Buy and sell to your heart’s desire. Import restrictions, import quotas generally don’t help.
I was discussing trade with a non-economist friend in the US. He works for a major US corporation that is a leader in AI. Although he does not have any formal education in economics, he has common sense.
I asked him what would be his advice to Modi regarding the trade with the US and other countries. His reply was simple. India should unilaterally remove all import restrictions and tariffs. Just ignore Trump. Indians should have the freedom to buy from wherever — US, China, Japan, Korea, etc.
That makes sense to me. Unilateral free trade. Liberalization of the economy means that people must be free to trade. But why does trade matter? Because it is the oldest means of creating wealth. Trade is like a magic technology: it is a machine that transforms less valuable things into more valuable things. People who refuse to trade or are prevented from trading end up being poor.
Free trade is the ladder that helped countries climb out of poverty. Indians need that ladder to climb out of the hole that their enemy—the Indian government—has dug for it.
It’s all karma, neh?
Atanu Dey : Life is a Random Draw 
“His reply was simple. India should unilaterally remove all import restrictions and tariffs. Just ignore Trump. Indians should have the freedom to buy from wherever — US, China, Japan, Korea, etc.”
That says it all!
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Very good article. Much as I would like India to remove all trade restrictions, it’s not that simple. For 75 years, the Indian government has heavily subsidized agriculture—offering minimum support prices and various incentives, without focusing on improving productivity. Take dairy as an example: the average Indian cow produces just 3.5 litres of milk per day, compared to about 30 litres in the U.S. Milk sells for around Rs75/litre in India, whereas milk of similar fat content would cost only Rs30–35/litre in the U.S. Due to decades of poor political leadership, around 65% of Indians are still engaged in farming, and a sizable share of these are dairy farmers. Opening up to dairy imports alone could put 10–15% of the population out of a job, posing enormous economic and political challenges.
Paul Samuelson, the Nobel laureate in economics, famously said, “To be a good economist, you must be a good political economist. It’s not enough to know the diagrams of supply and demand and the mathematics of econometric regressions. You have to be able to understand social tensions and conflicts.” Many of my libertarian friends overlook this crucial insight, and as a result, their advice is most often ignored.
A free market requires strong leadership—both political and administrative. It’s not just about removing import duties overnight; it’s about building the institutional capacity, legal framework, and public trust that allow markets to function fairly and efficiently. If India were to begin serious reform now, it might be possible to create such an environment over the next decade or two. But given the entrenched inefficiencies, corruption and lack of vision that characterize much of our bureaucracy and political leadership, I wouldn’t bet on that outcome. If even the US is drifting toward economic nationalism and socialist policies (and these are wildly popular with the base) under Trump, what hope is there for naturally left-leaning countries like India to embrace true market reforms?
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Unlike some of the other comments here, I’m far less optimistic about the direction the US is heading. Once a country starts sliding into socialism (ironically called MAGA), it becomes very hard to reverse course. Most people don’t even realize that Biden and Harris have, in many ways, been more free market advocates than Trump. But populist movements, whether from the left or right, tend to vilify the wealthy (just watch Tucker Carlson’s recent rant about the rich getting richer), erode trust in institutions, and stifle enterprise. History shows that once this mindset takes hold, turning the clock back is incredibly difficult.
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ostensibly India’s pain point was the US push for GMO seeds. While I can’t comment on that, not sure if dairy products was also an issue or not. I believe in the past they opened dairy to US firms like dannon who even set up plants to manufacture milk products but failed… they couldn’t scale…
perhaps refusal to F35 was another reason. In any case, trump is never consistent…there is always done exemption and no one really knows what’s behind the clownshow….
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Trump’s trade wars are a major clown show. He claims victory of having a great deal with 15% tariffs on EU (for eg ) while EU said there are none. I was dumbfounded when I first saw his tweets. US is the loser here but somehow Trump claimed as if he’s helping US….
That said, there are hidden exemptions that don’t see the light of the day effectively making these tariffs toothless also…pharma and electronic goods from India are exempted. Similarly many items for other countries…some are non-binding agreements like so and so will invest in the US so much to make Trump happy…
in any case, human ingenuity finds a way out of this insanity (smuggling perhaps) or shell companies and more work for law enforcement, etc which were probably not needed without tariffs in the first place…
I’m not sure if there can be a solution to this… India is a gone and lost case. US will weather Trump and I hope better sense will prevail eventually.
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It appears that Trump is simply delivering on promises made to the voters during his election campaign. Trump’s has campaigned on a platform re-establish US primacy in a world where China and other countries are overtaking the US. The American public perhaps are OK with this short term pain; much like how Indians have been with increased fuel prices and increases in taxes since 2014 in the hopes of a transformation of India.
While the economic consequences of Trump’s tariffs are what they are; I am just hoping that there is some method to this madness & chaos. Perhaps his approach in trying to fix whatever is broken in the US system is by trying to demolish and rebuild.
Your friend’s suggestions are absolutely spot on. But unlikely anything of that sort will happen. India is indeed a goner; multiple generations have failed us.
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Your arguments are valid, and I sincerely hope Indian citizens rally to drive policy reform.
Let me take the case of dairy products and their adulteration in India. Recent official tests in Noida and Greater Noida raised a red flag: 83% of paneer samples failed basic quality checks, and 40% of those were declared outright unsafe, with chemicals like caustic soda, starch or synthetic milk substitutes detected . Similarly, across Punjab, Haryana, and Himachal, nearly 22% of milk and milk‑product samples didn’t meet food safety norms, thanks to frequent lapses in monitoring and supplier ethics The Times of India.
So why is this happening under India’s food safety framework? Because local protectionism removes competition—and the pressure to improve. When domestic producers enjoy de facto shielding—from imports and rival brands—quality rapidly declines. Enforcement weakens, inspections become perfunctory, and unsafe products make it to market. In the absence of competition, market surveillance—or real legal accountability—disappears.
This is no failure of ignorance. Public officials and ministers are rational actors. Many operate within an administrative ecosystem deeply shaped by political rents and clientelist networks, where retaining power often matters more than delivering welfare . Thanks to colonially-inherited hierarchies and frequent transfers of officers, bureaucratic autonomy is low, innovation is stifled, and service delivery teams learn that compliance is a liability—not an asset.
That said, the failures are reversible. Here’s how we can practically eliminate adulteration and restore integrity:
Ultimately, consumers and civil society must be treated as front‑line auditors—not afterthoughts. Letting citizens scan milk packets, file complaints easily, or demand RTIs isn’t charity—it’s policy enforcement without central enforcement. When a system rewards merit over identity, and performance over patronage, then true reform becomes possible. Without these steps, ideological protectionism will remain a tagline—and public health will remain the cost.
There is another question I would like to ask. There’s an interesting point about unilateral free trade. I understand the argument that it creates wealth and helps a country climb out of poverty. Are there any historical examples of a country successfully implementing a strategy like that, where they completely ignored the tariffs and policies of their trading partners and it paid off?
–Siddhesh
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Yes. Hong-Kong is a good example. From one of the poorest it went on to become the richest region in Asia in matter of decades. Recently Argentina has shown similar trajectory.
India itself benefited post 1990s when it removed a lot of tariffs and import restrictions.
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Generally a good writeup but Indian economy, India’s demography, the historical perspective, neighboring nations and political setup are very different. We cannot look at India using a Western Prism. India’s per capita GDP looks dismal in US$ terms but is not so dismal if we consider PPP, Purchasing Power Parity. I can go on and on. But in a nutshell, we have a good leadership since 2014 (not perfect but better than any other possibility). There are challenges but I am sure the country is on the right path under the circumstances.
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One great feature of free market capitalism is not just that it makes everyone better off but it is also morally correct.
It is highly immoral to think it is okay for some to prevent fellow Indians from buying French wines, American Milk, Scottish whiskeys and Japanese Beef. India is a deeply malnourished country. Food prices are very high. Indians spend a very high amount of their monthly income on groceries and things like meat and eggs are often seen as luxury.
For a country that has world’s largest population, if anything food should be free of any taxes or import duties. It is pretty ridiculous that for a poor and large nation some people think it is important to tax the hell out of imported food. Why not let the rancher in Texas feed the kids in Bihar ? Especially when the Rancher and Kids are both willing ?
People claim “National Security” and “Food Security”. India spends an astronomical sum on subsidizing agriculture which also destroys our soil and water resources. All this money could have gone into developing better weapons or better border infra making the nation more secure. We could have 5 more aircraft carriers if the money wasted on MSP and Ladli Laxmi was put into defense. (I am not saying we should, but this is purely a counter to national security argument).
Having more food in the country makes us more food secure not less. Having land in Texas being cultivated solely to feed Indians or Australian farmers toiling in sun to put food on our tables in India makes us much better prepared for a war with say China. Also, if we import food from USA/Australia/EU/Japan and if their voters are dependent on this export who do you think these countries will support in case of a war ?
With a deeply integrated markets India has more leverage against the world, making us much stronger.
At some point we have to confront the fact that India’s farm sector has been a laggard in every aspect. Our farmers work too hard, produce too little and of extremely poor quality food. Only a small percentage of our farm produce meets any reasonable quality standards. We do not have robust supply chains nor we can trust the quality of food we eat.
To give context nearly 100% of restaurants in India including restaurants that are serving high end customers serve fake paneer. Nearly all “ghee” used in street food is not ghee. Our meat processing plants are one of the filthiest in the world. Our fish is adulterated with formalin.
With external investment and know how, Indian farmers have an opportunity to get better. In fact we can export high end food items to the world only if we fix a lot of internal problems, better farmers around the world and companies can teach us how.
We have learned how to make cars from Suzuki, two wheelers from Honda, software from Google etc. etc. We can also be a world leader in food and dairy with similar approach.
Sadly Indians and current American leadership is intellectually backward to fully understand benefits of free trade.
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Telling Indians to import beef is not different from asking Americans to import dog meat.
“Why We Love Dogs, Eat Pigs, and Wear Cows”
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If Indians don’t want to eat beef and if Americans don’t want to eat dog meat that is totally fine. Each culture has their preferences. But there is no need to have any restrictions on import of either for those who might want to consume it.
In fact India can totally remove all restrictions on import of beef or port because there is no Indian farmer harmed by their import as we have neither demand nor local supply.
While most Indians do not like beef, beef is indeed available across India. Most fine dining restaurants in the country have Wagyu or Angus available even though they do not print it on their menu. I believe it is smuggled.
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“no need to have any restrictions on import of either” — are dog meat imports allowed in the US?
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Great Article, simplified enough for any laymen to understand, sadly most of Indian population only drinks propaganda cool-aid. For Trumps current US policy, I heard that the theory that they are basing the tariffs on is that foreign nations have grown to be dependent on US exports and that the tariffs would be eaten by the producers or their governments(via subsidies so that the local economies are not disrupted). It could be true but just so shortsighted and any such ripple in market has indirect consequences. As simple as tariffs on steel imports(in Trumps first term) has increased the prices of domestic steel by double digits.
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