Trump's Tariff War Can Ruin Indian Economy, Warns Ex-FM Chidambaram: 'Want To Know Centre's Response'

On Thursday, former Finance Minister and senior Congress leader P Chidambaram urged India to align with the more rational voices globally and work together to avert a tariff and trade war.

He also pressed the Union government to clarify its stance on US President Donald Trump's threat of initiating a tariff conflict.

While opening a debate on the Finance Bill in the Rajya Sabha, Chidambaram highlighted recent reductions in customs duties announced by the Narendra Modi government in the Union Budget 2025-26, covering items from motor vehicles to toys.

He remarked: "Is this a genuine change of heart? I don't think so. I think this is the effect of Mr Donald Trump. The Trump Effect has forced the government to reduce these duties."

Labelling tariffs as the critical issue at hand, the former finance minister asserted that Trump had warned PM Modi of an impending tariff war (reciprocal tariffs) starting April 2.

"If the PM's praise (for Trump) has failed and tariffs are imposed, I want to know what is the government response. It will wreck the world economy and ruin the economy of developing nations. If a tariff war and trade war is unleashed, it will lead to a dip in exports, lower FDI, higher inflation and currency depreciation," he warned, criticising the government for not holding parliamentary discussions or consulting Opposition parties on the issue.

He stressed that India should join forces with nations like Canada, Britain, France, Germany, and Japan to prevent such an economic fallout.

Drawing attention to domestic challenges such as rising unemployment, escalating costs in food, education, and healthcare, stagnant wages, declining consumption, a weakening currency, and growing household debt, Chidambaram accused the government of "mercilessly cut[ting] budgeted expenditure" on health, education, social welfare, agriculture, rural development, and other vital sectors.

Earlier, Finance Minister Nirmala Sitharaman tabled the Finance Bill, 2025 in the Rajya Sabha for review. The bill had already been passed by the Lok Sabha on Tuesday.