G Mahalingam, Non-Executive Chairman, City Union Bank honours S Gurumurthy, Economic thinker and journalist at the 19th CUB V Narayanan Memorial lecture in the presence of S Vaidhyasubramaniam, Vice-Chancellor, SASTRA University and Raghuvir Srinivasan, Editor, businessline | Photo Credit: Bijoy Ghosh

As US President Donald Trump’s tariffs sent shockwaves across the global economy, economic thinker and journalist S Gurumurthy on Saturday said that the issue is likely “to do less damage to India than it will to other countries”. He views the global turmoil as a catalyst for reinvention of Indian economy and said that India will emerge as ‘a model country for the world’ in the next 5-10 years.

Gurumurthy was delivering a lecture on the ongoing tariffs standoff at the 19^th City Union Bank (CUB) Shri V Narayanan Memorial Lecture at SASTRA University in Chennai.

President Trump seems to be just “starting out” on his plan to go from “multilateralism to bilateral” trade relations with countries, he said adding that how this progresses will depend on who blinks first. “The days of globalisation are over in the current geo-political shift and large countries like India should have strong bilateral relationship with a handful of countries and cannot afford to have multilateral ties with many” he noted.

“What the Indian government will do [to tackle this], will depend on what Trump is likely to do next,” he said.

India, with a relatively lower debt-to-GDP ratio than other countries, is likely to manage the global turmoil better than others, he said. Citing the 2008 global financial crisis experience, he noted that India managed it better because of its “family system, responsible and moderate consumption.” “We have to keep our socio-cultural-economic interlacing intact.”

Track 2 diplomacy

On the steps India can take to stay stable amid the global turmoil, Gurumurthy suggested that India may have a ‘track 2 diplomacy’ with the US that other countries lack. “All countries are dealing formally [regarding tariffs] while we are dealing informally; there is an alignment between the leaders of the two countries,” he explained.

Commenting on the immediate repercussions of the ongoing standoff between US and China, the economist predicted that US will face higher inflation and the concept of ‘global economy’ will slowly disappear, paving the way for a new paradigm of ‘country-first’ policies across economies. He also estimated that growth rate of global trade will likely shrink below 1 per cent, down from the the earlier projection of 2.5 per cent.

Viewing the issue from US’ lens, he explained how the imposition of tariffs is not new for the superpower and the current administration, in particular, is dealing with multidimensional challenges both domestically and internationally. President Trump, he said, is fighting ‘wokeism’ on the one hand, and also reeling under the impact of accumulated debt and current account deficits. The country has also been footing the security bills of Europe but is now saying it can’t, he added.

Titled the ‘Future of Global Trade and Tariff’, the session was moderated by Raghuvir Srinivasan, Editor, businessline. S Vaidhyasubramaniam, Vice-Chancellor of SASTRA University, and G Mahalingam, Non-Executive Chairman of City Union Bank, were also present.

Published on April 20, 2025