Donald Trump has started a war. But this war is not against China. It’s not against Europe. It’s not against India either. It’s a Tarrif war against the dollar.
Yes, you heard it right.
The dollar, which is an American weapon, today Donald Trump wants to destroy that dollar. Because of which protests have started all over the country.
Trump said that if inflation is too high, then he will reduce inflation. But his move will not reduce inflation. On the contrary, the iPhone, which is an American product, is going to cost $2,000
in America.
Trump, like the air traffic controller of the movie Dhamal who first says, that red button is visible, and then after pressing it, he says, no , I had to press it.
100% unreliable, but 100% entertaining.
People say that Trump called Modi a friend and imposed 26% tariffs.
This is a big loss for India. But this is not true at all. The real story is very complex. Along with India, Donald Trump has imposed tariffs on 180 countries.
Even on such an island, where not humans, but only penguins live, there are 10% tariffs on that island.
What could be Donald Trump’s threat to penguins?
This sounds stupid, but there is a logic behind it. What is that logic? How can tariffs start a war? Why are American stock markets being destroyed because of this? And what difference does it make to us? Let’s understand in today’s video. This is our new series, Trump vs The World, where we will see Donald Trump’s impact
on the world in depth. That too from an Indian perspective.
Chapter 1. The dollar is dying.
In the beginning of this year, I had said that the value of rupee was falling against the dollar.
To buy 1 dollar, we had to pay 87 rupees in January. And people were thinking that soon 1 dollar will be equal to 100 rupees. But wait, what is the value of dollar
today?
When we asked Google, they said 85 rupees. Maybe this price will fall even more in the future. And this is what Trump wants. He wants the dollar to be cheaper.
Why?
So that he can make America great again.
Wait, wait, wait.
How can he make America great by weakening the dollar? Doesn’t this sound counter-intuitive? If I want, I can throw big numbers at you. But a picture speaks a thousand words. Look at this graph. These are the average tariffs that America has imposed on the world today. Trump’s tariffs have gone up to the level of 1909.
And its impact is going to be the most on America. American stock market on 3rd April fell below 4.8% in a day.
But why?
To understand, more than numbers, I think an
example is important. An example that you will be able to understand and remember for the rest of your life. You must have seen Shark Tank. The brands that come in Shark Tank USA never make their products in America.
Why?
Because the American dollar is very expensive. What does it mean?
Let’s understand. Let’s take the example of Nike. Nike is an American company. But if these shoes have to be made
in America, then a worker in America has to pay $22 per hour. Whereas in China, they have to pay $42
per month.
Which is less than $2 per day. Of course, this data is very old. And at one time, we can bring Kashmir from Pakistan, but we can’t bring reliable data from China. But assume that the actual wages will be 10 times higher today.
Still, producing in China is 10 times cheaper
There is one main reason for this.
1 American dollar is equal to 7.2
Chinese Yuan.
Why shouldn’t the company be American?
Instead of making products in America, they find it cheaper to go to China and make products. Plus, human rights are not equal in China. That’s why it is written on the iPhone Designed in California, but made in China. Now, Trump has imposed a total of 54% tariffs on China. This includes 20% tariffs that existed before April.
But China is not crying. China is laughing. Because they know who will suffer the most. The same American companies who make their products in China. Like Apple. Apple’s iPhone was not cheap before, but after the tariffs, it can be worth $2,000. And that too in America.
That is, in the future, if you are going to America, then your American friend will tell you that he is coming from India, bring an iPhone. Because in America, iPhone will be more expensive than India.
If you also want that American things in India become cheaper than America, then like the video. I have a secret connection with Trump. If this video gets 100,000 likes, then everyone who likes it will get an American visa for free.
Really.
Pinky promise.
Are you convinced now or should I lie more? Trump thinks that because of this move, for American companies to open factories abroad. Then they will open factories here and ultimately jobs will be generated in America. And for this, the most important thing is to destroy the dollar.
But not suddenly, slowly. Economist Stephen Miran says that the dollar is overvalued. Which is a fact. Because of which any company feels stupid to set up a factory in America. It is better to open a factory in a developing country.
Produce from there and sell in America. The process of weakening the dollar will have to be done indirectly.
Because Trump wants to weaken the dollar in such a way that it remains the world’s reserve currency.
But still, for businesses, opening a factory in America becomes logical. As if Trump has started a surgical strike
on the dollar.
Basically, a self-reliant America. Which we are seeing in the form of MAGA. That is the bottom line.
what do you think?
Is this logic right?
Tell me in the comments. Some people will definitely consider this logic to be genuine. But to be honest, Trump’s math is a little weak.
Chapter 2 – Fail in Maths
All the economists around the world believe that Donald Trump has failed in the economy. Because of his policies, there is going to be a recession. But along with that, he has also failed in Maths. Why? And how?
According to the way he has calculated this figure.
Keeping India aside, let’s take the example of another country. Vietnam. Donald Trump says that this tariff is a reciprocal tariff.
That is, if seen from that logic, then
Vietnam and America impose a 9% tariff on Vietnam. So America will also impose a 9% tariff on Vietnam.
Actually, that seems logical and fair. Right? Wrong.
Because according to Trump’s calculation, he will impose a 46% tariff on Vietnam. So why did he jump from 9% to 46%? The short answer is trade deficit. The long answer is because Trump is a little weak in Maths. Because he has made this simple calculation very complicated.
The formula has been released by the White House. This is the official formula by which they have calculated the rate of tariffs. did you understand anything?
No, right?
Not even me.
Let’s simplify. Change in tariffs is equal to American imports minus exports from the country. In this case, Vietnam divided by import elasticity fixed at 4 multiplied by policy parameter fixed at 0.25 and exports trade deficit or surplus divided by 4 into 0.25 into imports.
Basically, trade deficit is imports minus exports. Vietnam is a developing country and it has become China’s China. Basically, China has shifted its factories to Vietnam.
So it also exports well all over the world. America imports more than Vietnam and exports very little.
So Trump believes that Vietnam is doing something wrong. Either it is manipulating currency or giving less salary to its workers or fooling American consumers.
That’s why Vietnam has a punishment of 46% tariff. Trump’s method of calculating tariffs for India is
something like this. Because America is one of those challenging countries where we export more and import less.
But this math is also failing for countries like Australia. Because in the case of Australia, Australia exports $16 billion to America and buys goods worth $ 34 billion from America. That means for Australia, according to this calculation,
negative tariffs should come. Basically, there should be a discount.
But still, Australia has 10% tariffs. Australia is also like, why did you break me? But does logic affect Trump?
No.
Trump is affected by MAGA. Make America Great Again.
Chapter 3 Saga of MAGA MAGA
i.e. Make America Great Again is based on one concept. Which we have explained in Chapter 1. And tariffs are just the beginning. This is the first move in the long game of chess.
Trump wants to divide the world into three parts. Just like the world was divided after World War II. Three groups i.e. three boxes.
One is friends, second is neutrals and third is enemies. Enemies include those countries which America hates the most. And they have the highest tariffs. China, Vietnam, Malaysia, Thailand, Bangladesh which are defeating America in manufacturing.
Second is neutrals where India has made its place. EU also comes here. Third is friends. UK, Australia, Singapore, Saudi Arabia.
First group has the highest tariffs and third
group has the lowest.
i.e. America wants to adjust the world order again. It wants to move manufacturing from these countries
to America again. And due to focus on manufacturing, these tariffs will have a negligible impact
Today, America is a superpower. Military superpower, economic superpower and most importantly, consumption superpower. 30% consumption of the world is done by one country and that is America. And this one thing gives America a big advantage. And that advantage is leverage. Leverage i.e. bargaining power.
Trump wants world leaders to bow down to him. To beg him and ask him to reduce tariffs. Because if America doesn’t reduce tariffs, then they have no option.
There is no bigger market than America. And there is a focus on two countriesin tariff war. China and European Union.China has in total 54% tariffs and EU has 20%. The EU has only criticised. But China has put more tariffs on America.
China has also put 34% tariffs on all goods coming from America China chose escalation, chose war. America will also increase tariffs. According to me, at least 15%. Then China will increase more, then America more and a trade war will start from here.
Like we used to study about globalization in school, now its exact opposite is going to happen. Protectionism. Here, two scenarios come in front of my eyes. One, that China bows down and second, China says I won’t bow down. In the first scenario, Trump will look completely successful. Where Xi Jinping will go to America and kneel in front of Trump and say, If the government is great, then accept the gift. But what do you think? Is China so weak?
Not at all.
If China chooses the second scenario, then it will be bad news for both countries. Because China’s economy, which is completely dependent on manufacturing and exports, will be completely shut down and there will be a recession in America too.
But there is also a third scenario from which China can win and Trump can also look successful. China doesn’t have to do anything. China has to find a country where tariffs are low. They have to send their products there and
from there to America. That is, the country with penguins where no human lives. If China makes its colony there, then China can send its products to America from there. Then the products will not have 54%
tariffs.
Then the products will only have 10% tariffs. The example of penguins has become a little extreme. But from some other country, like Singapore, America can export.
Chapter 4 Lessons from History You see,
This is not the first time that a country has used tariffs like a weapon. Let’s understand through some examples.
In the 1700s, India produced 25% of the world’s textiles. Our textiles were famous all over the world. Many countries in the world were also threatened by India’s chintz fabric. Because its detailing was unmatched. Indian textiles were completely destroying That’s why in 1721, Britain brought the Calico Act, which banned
the import of cotton textiles.
Under the Calico Act, 75% tariff was imposed on Indian textiles. At the same time, under the Industrial Revolution, Britain started making machine-made textiles. They started printing Indian patterns on their textiles, which reduced the prices.
All these factors together completely destroyed India’s handmade textile industry. Until 1813, we commanded 25% of the global textile market. Now it has become less than 3%. Let’s understand another interesting story.
In the 1930s, two Republican congressmen, Willis Hawley and Reed Smoot, convinced the Senate to create an act called the Smoot-Hawley Tariff Act.
Under this act, the USA increased tariffs on 20,000 imported goods. In 1929, the Great Depression began in the
USA, which you may have read about in history.
America’s intention was that because of the tariffs, the American industry and people would get a
lot of protection. Even at that time, many economists were against this bill.
But President Herbert Hoover signed this bill.
And what happened? The effect of this bill was exactly the opposite.
Exactly what we are seeing today. Tariffs were imposed on tariffs. All countries retaliated. They imposed tariffs on American products. Protests were held in many countries. And they reduced the import of goods from America by 18%. As they say, History repeats itself. Even today, we are seeing the same thing. Protests are taking place in America. All economists are warning that this is not good economic policy. And this will only harm America.
And other countries are also imposing tariffs on American goods in return. All in all, this series of tariffs lasted only two years.
In two years, the USA had to reverse these tariffs because their exports were also declining. And because of this experiment, the USA decided to take over the world trade order. And now America wants to do the same again.
Now, from India’s perspective, whether it is good news or bad news, only time will tell. Or maybe we will tell in the next video.
For now, let’s talk about what India needs to learn in this scenario.
Chapter 5, Lessons for India.
Many people asked us on Instagram what will be the impact of this move on the
middle class wallet? The answer is recession. If history teaches us something, it is that
winds of recession flow from west to east. That is, the biggest and first impact of recession will be in the west, in America. And then it will slowly reach India. That is, it will be difficult for startups to get funding. New job opportunities will be difficult. But right now, new self-employed people will also emerge.
Lesson no.1
You see, some time ago, our PM was in America. And here, many things were discussed behind the scenes Because of which, the 26% tariffs imposed on India don’t seem like a big number to me.
In fact, it seems very low. But that is nothing to be happy about. Because Trump calls us friends, but still, he
keeps us in the neutral category. Now China will catch some other country and send its products to America from there. This is for sure. And American people can be cunning, but not stupid.
They know that this option is for China. And China will do the same. But America wants this to happen from Singapore, not from India.
America welcomed China into the WTO. And America has to pay its price 25 years later. They created their own rival. Now they won’t let India be their rival. This is the truth.
Lesson no. 2 Why aren’t the tariffs on India high?
Trump calls Modi a tough negotiator. Now what deals have been made on the basis of which our tariffs have been reduced? This is something to think about.
It is a very concerning thing. Is it connected to Tesla, Starlink and Elon Musk? Who have been trying to do business in
India for many years. But they are not able to do it due to high taxes.We need to pay attention here.
Lesson no. 3 After the pandemic
we all understood that the world order was changing. That is, globalization was going exactly the opposite.
The country was worried about supply chains. They didn’t know which country would wake up tomorrow and say that stop selling products from today.
So every country was planning very carefully. In the end, there is a message for Indians. That the American dream is over. If you think that you will get a degree from an American college and you will definitely get a
job there.
Then think again. If a recession comes, which will definitely come, then who will be the first to be
impacted? Those new foreign job seekers. If you are going abroad for education, then sure, go for it. Go for the experience. Go to have the time of your life. But if your objective is return on investment, then think again. If you are thinking that you will go there, work for 10 years, earn all your money back, and then come back here, then
that’s not going to happen. This dream, which we call the American dream, is a 30-year-old dream, which is
no longer relevant today.
Because today’s America is not that America. It is not the land of opportunities, at least not for immigrants.
You have to remember this. And for that, we will have to first improve the country’s education system.
So that the country’s talent does not leave the country and go to another country. How can we improve India’s education system? We have made a very solution-oriented video about this, which you can watch here.
Trump’s moves can be unpredictable. What our friend says today, will not be different from what the enemy says tomorrow.
But if you want to understand every move of his, and want to understand its impact on India, then subscribe to the channel. Because we believe in geopolitics, there are no
permanent friends, only temporary interests. And this is the important thing. It makes a difference for me to reach
you.
