Former Reserve Bank of India (RBI) Governor Raghuram Rajan on Tuesday expressed his deep concern over the threats of tariff increase by the new US President Donald Trump. He described the tariff increase plans as “a huge source of uncertainty” that could disrupt global economic stability.
Speaking to India Today on the sidelines of the World Economic Forum (WEF) 2025 in Davos, Raghuram Rajan said, “I think Trump’s threat of tariff hikes is a big source of uncertainty and a big source of disruption for the rest of the world. For America, I don’t think they will be as beneficial as the (Trump) administration believes, partly because goods are made outside America for a reason – it’s cheaper to make them outside. Is.”
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America does not benefit from tariff policy
“Trying to bring them back to the US by imposing tariffs generally does not work,” the former RBI governor stressed. Explaining the impact of the tariff hike on the US, Raghuram Rajan cited large economies like China and how they import goods from smaller countries like Vietnam to reduce manufacturing costs.
Raghuram Rajan said, “Trying to bring those goods back into the US by imposing tariffs usually does not work as intended. If possible, production would simply be moved elsewhere. For example, China. What was being made in China has now been transferred to Vietnam.”
The price of production will increase in America!
The former RBI governor further said, “If universal tariffs are imposed, they may stop imports from other countries, but this will force them to produce in the US at much higher costs. Why is China doing this? There’s a reason for this – it’s cost effective.” Further in the conversation, he also pointed out that if tariffs change overnight, there will be uncertainty in foreign investment.
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He said, “If tariffs could change overnight, there would be a lot of uncertainty about where to invest. I believe the president has three benefits in mind – it will level the playing field, it will be a source of revenue and it will create jobs.” “Will be the source of.”
Soon after taking the oath of office, the 47th US President Trump reiterated that he would impose 100 per cent import duties on the BRICS nations if they take any step towards reducing the use of the dollar in global trade, including on India. Is included.
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