Trump tariffs could delay fresh investments, hurt job creation: Jaimini Bhagwati of CSEP

The uncertainty created by the tariffs may lead to a slowdown in fresh investments, as businesses adopt a “wait-and-see” approach.

Jaimini Bhagwati, Distinguished Fellow, Centre for Social and Economic Progress (CSEP) and Ex-Joint Secretary of Department of Economic Affairs stated the risk-averse approach companies are likely to adopt in the current climate. “All investment, whether it is domestic or foreign – all fresh investment, will be put on a hold,” he added.

Even companies with well-advanced plans might reconsider their timelines. “If you are planning a 1,000 crore investment over the next six months… my own guess is that everybody will go into a mode of go slow.”

Bhagwati stated that this is not just an Indian issue, but a global one. “This is not good for us, it is not good for the US, it is not good for ASEAN countries, it is not good for anyone.”

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The tariffs are also expected to force businesses to rethink their production strategies. “Companies planning new production capacities will now have to reassess their market projections,”

Bhagwati added . “Many will scale back their plans, leading to a reduction in job creation.” The impact of the tariffs on underemployment in India is a major concern.

Bhagwati believes that the impact of the US tariffs will extend far beyond just trade. “These tariffs are a part of an overall Trump agenda, and this will have consequences in the short in the medium and long term around the world. And it will not just be confined to trade. It will be more widespread in terms of foreign direct investment and then, perhaps even more importantly, strategic issues will be viewed differently.” This broader uncertainty is a key factor driving the anticipated investment slowdown.

Bhagwati agreed with the notion that India maintains high trade barriers. “The US is right that we have irresponsibly high trade barriers. For instance, you know certain kinds of car above a certain engine size, 125% duty.” He suggested that a reduction in these import duties could ultimately benefit Indian consumers.

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