For opponents of free trade, Donald Trump’s ‘Liberation Day’ may seem like ‘vindication day.’ The world’s top power, the US, which generates a quarter of the globe’s output, took an inward turn that ‘nuked’ the aim of open borders for commerce. Globalization, which had long wobbled along, suddenly looks skeletal. America is poised to wall itself off with a steep hike in tariffs to an average level last seen more than a century ago.

It spells a bleak outlook for others.

Trump’s bombshell of 2 April won’t affect US trade-pact carve-outs of the kind that Canada and Mexico have. But it’s grim news on the whole. On 5 April, the US will erect a universal import barrier of 10%. Next, on 9 April, imports from some 60 countries with which the US runs trade deficits will be shifted to a punitive regime of country-specific tariffs. Labelled ‘reciprocal,’ these don’t cover vehicles, some metals and other sectors already shielded by America’s sectoral levies (plus a few more), but the surprise is that they don’t really mirror what others levy on its stuff.

India’s service exports escape, as expected, but merchandise shipments to the US will face a 26% levy. This rate looks calculated to reflect half our US trade surplus as a proportion of US-bound exports. American data puts our trade gap at $45.7 billion in 2024, which is 52.3% of the $87.4 billion worth of goods we exported. As this formula would push us to buy more from the US and sell it less, in lieu of easier access to its market, it may serve Trump’s aim of balanced trade.

Yet, it will also spark off inflation, shrink demand, cramp output and foster inefficiency in the US, even as tariff and currency wars flare up to hold global prosperity hostage. Hence, if anything, the ravages of Trump’s shock-and-awe policy will inflict enough pain to vindicate advocates—rather than critics—of barrier-free trade.

Since the US seems convinced that a myopic push for autarky will make it ‘great again,’ the rest are left searching for silver linings to the cloud cast by this dust-up. The fact that some of our export rivals face stiffer reciprocal rates—like China and Vietnam—has fed hopes of trade diversion in India’s favour. Perhaps a few supply chains could be lured from our Asian rivals. Some of our export items may also gain a cost edge over others.

But all this is poor consolation for the American market’s steeply raised drawbridge.

Higher landed prices of what we export imply gusty headwinds for our cargo shipments, even as overall US demand slumps. Price-sensitive exports will fare the worst. Among our bulky export categories, pharma is relatively inelastic as bills are mostly paid by health insurers, but this category is exempt from the 26% rate. Gems and jewellery, though, seem less exposed to price hikes than electronics and farm exports. As for textiles, apparel, shoes and so on, competitive gains vis-a-vis our Asian rivals might not help if price shocks deflate America’s retail offtake. Granted, the Indian economy depends less on trade than many others, but still, Trump’s move is likely to drag our GDP growth down.

Clearly, New Delhi must move swiftly on a trade deal with Washington to secure India its own carve-out. If US demands prove too stiff—say, on farm produce—then we could aim to reduce our import-export gap for a lower reciprocal rate. Meanwhile, we need buffers. We must forge closer ties with other markets, and not just with the EU and UK. It’s time to look East, even if this means talks with China. An open world and a closed US could co-exist.