Trump’s 50 percent tariff (basic 25% plus additional 25%) on Indian exports to the US has generated panic not only within the government circles but also in labour intensive export sectors like textiles, gem and jewelry, leather goods and marine products.

Even as the India-USA Bilateral Trade Agreement negotiations seem to be bogged down because of market access challenges, the punitive additional tariff of 25% has come into effect as Trump wants India to stop buying oil from Russia.

Fear of a sharp decline in export to the US and the consequent - unaffordable - job losses at home has spurred the policymakers into damage-control mode. Suddenly, we are over-whelmed by events. Our dependency has become our vulnerability; we seem to be under-prepared to ride out the storm.

Did we learn anything from Trump’s previous stint (2017-2020) at the White House? Looks like we have not.

It was not too far back – just six years ago in 2019 - Trump imposed tariffs on India’s steel and aluminium products imports and demanded greater market access for US dairy items, agri-commodities, medical devices etc. In addition, India was excluded from the Generalized System of Preferences (GSP) scheme.

India retaliated with customs duty on US origin goods including lentils, apples, tree nuts (dry fruits) and so on. Even that time, the danger of Trump targeting India’s labour intensive goods (textile, jewelry, seafood, leather) was very real; fortunately, the issue did not precipitate.

Fast forward to 2020 and then 2022. First, the world faced Covid-19 inflicted lockdown. Massive supply chain disruption upended established world trade. The world faced pockets of massive surplus in some regions and acute shortage in many others. Exporters lost markets and importers struggled to source essential goods. The Russia-Ukraine conflict worsened the situation with western world Sanctions on Russia creating an energy crisis for Europe and Black Sea blockade preventing food shipments.

Many management and governance lessons evolved from these crises; but we hardly learned. We continued with our business-as-usual attitude. The country may have to pay a heavy price for its lackadaisical approach to export-import trade and for failure to put its own house in order.

Several countries learned key lessons from the successive crisis. One, do not be over-dependent on any market for your export; diversify your markets geographically as much as possible. Two, do not be over-dependent on just one or two origins to source the goods you need to import. Diversify your sources of supply. Three, maximize your exports and minimize your imports for a healthy trade balance.

One is not sure to what extent India’s policymakers have imbibed lessons from recent history. Risks lurk all the time - unforeseen risks and unforeseeable risks. History holds lessons all the time; it is just that we have to be a good student.

One may categorize Covid-19 lockdown as both unforeseen and unforeseeable. We cannot say the same for Trump tariff tantrums. This was foreseeable going by experience; but we failed to identify the risk and ring-fence the economy.

While export is important to generate foreign exchange earnings, there’ a huge domestic market with a billion plus population waiting to be adequately serviced.

See our dependency on goods import – gold (nearly 100 percent); crude oil (over 80 percent); vegetable oil (over 60 percent); pulses (over 20 percent); coking coal; organic chemicals; fertilizer; computers; electrical machinery and many more.

Although currently hypothetical, two scenarios come to mind. In the first, imagine, Trump and Putin come to an understanding, shake hands in friendship and western world sanctions on Russia are lifted. Do you think Russia will continue to sell crude oil to India at below the market price and continue to accept Indian Rupees in payment? Does India have a plan to respond to this hypothetical but plausible scenario?

Another scenario. Out of India’s total annual vegetable oil import of 15 million tonnes valued at about USD 15 Billion, palm oil alone accounts for 9 million tonnes (60%) worth approximately USD 10 Billion. What if Indonesia and Malaysia either stop or restrict supply of palm oil to India (for whatever reason) or impose steep taxes on their export? Do we have enough options?

Remember, Indonesia has a massive trade surplus with India estimated at USD 12 Billion as we import not just palm oil but also coal, timber and nickel. We repeatedly talk about becoming Aatmanirbhar (self-sufficient) in oilseeds and oils. Do we have the right policies in place?

Policy prescriptions are available. This author himself has provided many. But ‘political will’ to implement them seems to be lacking.

This is where dependency can become vulnerability. Our policymaking is more often than not for crisis management rather than having a long-term vision, backed by strategic action plan.