Reciprocal Tariffs: The Spark That Ignited a Global Trade War?

 

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The declaration of reciprocal tariff on virtually all nations of the world by the Trump administration of the US heralds the beginning of a global trade war. Make no mistake about it. In so doing Trump has showcased the true extent of American might and proved to the world that it is the latter that needs the former and not the other way round.

The Europeans now understand that they have to fund their own defense and not expect the US to do the heavy lifting for them, even while expecting that the US will treat them with kid gloves with regard to trade and economic matters. Developing nations across the world, benefitted immensely from the US decision to outsource products and services via a globally integrated supply chain generating immense wealth in countries like China, Vietnam, Cambodia, South Korea, Taiwan and India.

Well, the US has yanked the carpet from under the world’s feet. It seeks to return manufacturing to within its own borders, and is busy dismantling the globally integrated world economic order it itself helped put in place. It is doing so, because it no longer suits the US to see a rival like China and others emerge using wealth they generated  by trading with the US to rival its power and prestige.

It is at the same time open to signing mutually beneficial trade deals with countries around the world, if it suits its economic and strategic interests. There is perfect sense in what Trump is doing-he wants manufacturing jobs to grow in the United States and their gargantuan national debt to be reduced substantially. The US really does not need to integrate with the wider world in order for its enormous economic engine to chug smoothly. It has enough natural resources to be self- sustaining and really needs to engage extensively only with Canada and Mexico, its immediate neighbours with whom the US already has a substantial trade deal in place.

The US is actually pretty much sorted. It is the rest of the world that has to find its bearings in the fast unravelling global world order. Of all the countries in the world, it is India, a continent sized country blessed with huge natural resources and relatively healthy demographics that is best positioned to ride out the storm. The fact that it hadn’t integrated to the extent that other countries in the Indo-Pacific region had with the global economy will prove to be its biggest insurance in the turbulent times that are yet to come. Rather than try to be an export oriented economy, it can look to its vast domestic market for economic growth, just like the US. It has to at the same time bolster its defense preparedness, against a China, which is going to be increasingly belligerent in its attitude to its perceived strategic rivals in the near future, as the US systematically undermines its economy and its worsening demographics exacerbate its problems.

Europe on the other hand faces existential problems, what with an expansionist and revisionist Russia hell bent on reclaiming the lands in Eastern Europe that were once part of the erstwhile Soviet Union. There is already a trade war on between the West and a totally determined Russian regime, which wants to take the world down with it if need be, in its quest to become a dominant world power, which it feels is its rightful destiny. It does have vast natural resources and a sufficiently large number of people to help fight its fight,  at least in the near future. At the same time it is growing its economic and strategic ties with an economically powerful China, allowing it to stay in the game much longer.

With a blistering China seething at America’s attempt to belittle it, one can almost see an economic and military Axis forming between China and Russia, which does not bode well for whatever remains of a stable world order.

In the era of trade wars that is coming the world can forget about the peaceful coexistence of nations, tremendous economic growth and unprecedented advancement of human welfare which occurred over the last six or seven decades.  Instead, it will be each nation looking out for the best way to survive and possibly thrive in a world, where global cooperation is dead and deals between nations and regional power blocks will usher in a Darwinian vision where uncertainty will be the only certainty.

Solopreneurship in a time of economic uncertainty and flux

 

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These are fraught times with geopolitical tensions and the upending of a well-established global economic order by the sole superpower of the world promising to usher nations across the world into a pall of uncertainty. Add to that the seemingly inexorable march of AI threatening jobs across segments and sectors. Everyone is afraid of what the future holds for them in the next five to ten years. Above all, they are afraid if they will have jobs at all, the way things seem posed to move.

Is solopreneurship the answer to people’s job and employment anxieties? It is an autonomous occupation that is completely under one’s own control. It allows everyone to leverage their own skills to create an income stream that is unaffected by corporate downsizing or a change in the economic orientation of industries.

It can help impart stability and put one in charge of one’s affairs, which is not possible in the case of traditional employment, especially in the times that we live in. That is because a solopreneur can be agile and nimble with business decisions-something that large, established corporations struggle with. This is what will help people who adopt solopreneurship stay afloat despite the uncertainty and head winds that seem to be the norm in today’s times.

What’s more, the very AI which threatens traditional livelihood can become a tool or platform to be leveraged to automate tasks, put in place efficient processes, improve productivity, increase sales and fuel growth and expansion. The important thing here is to find one’s own niche or niches and build one’s business around them.

Solopreneurship allows one to have multiple income streams, so that in the event of one income stream petering out, there are others that can keep one afloat. Besides, a solopreneur can expand into international markets taking advantage of digital global connectivity. This can help them hedge their risks with regard to any slowdown in business.

Solopreneurship is, of course, not risk free, but what line of work ever is? It requires good business ideas, strategic planning and deft decision making, but is very doable in the age of AI and global connectivity. Above all, it is one’s insurance against economic redundancy in fraught times, if done right.

Is lowering of tariffs actually good for India?

 

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 Come April 2 and the imposition of the reciprocal tariff regime by the United States on nations around the world including ours, there is bound to be tremendous economic uncertainty facing the Indian nation. Though India is not as economically integrated with the US as the other major economies of the world like China, the EU, Canada and Mexico, there are bound to be serious ramifications of this upending of international trade conventions on it as well.

India has two options before it. It can choose to ride it out by letting the reciprocal tariffs roll and play themselves out or it can take a hard look at whether its policy of inordinately high tariffs on imported goods are actually doing its economy more harm than good. While India is definitely better positioned than most other major countries to stare the bully in the face and not back down on tariffs, the question that it needs to ask is if doing so actually suits the interests of the Indian economy and its people.

High tariffs on imported goods makes local industry complacent and lazy, in the process harming the interests of the consumers-the common people of India. There is no incentive on the part of local industry to compete with the best in the world in terms of quality, features and price. This in turn stifles innovativeness and the development of new age products that offer the consumers the best value for their money. Remember the kind of cars India used to have in the old license-raj era of high import duties on practically every product under the sun.

Once the license raj was dismantled, the old Ambassadors and Premier Padminis with their sputtering engines and vintage bodies became relics of the past, which had no place on Indian roads. As a matter of fact a veritable automobile revolution swept the land with the vast middle class section of the population, which barely managed to buy a scooter, thought nothing of buying the leading car brands of the world.

India today stands on the threshold of becoming a major global power and a developed country, but for that it needs to expose its economy to more comprehensive trade with major economies like the U.S., the U.K. and the European Union.  We could sign separate trade deals with all of them to facilitate and expedite the process if needed, but it cannot be business as usual. The latter approach will find India always lagging behind and failing to realize its full potential.

Reducing tariffs will help Indian companies become more competitive globally as they will be required to enhance quality and improve efficiency in order to survive in the new dispensation. This will grow India’s exports in a major way. The Indian consumers on the other hand will have access to much better quality goods at more reasonable prices.

India’s current share of global exports is a mere 1.8%[1]. This is dismal for a country seeking to become a global economic super power in the near future. Dismantling the high tariff regime might be the big-bang reform that India needs to kick start and rev up its economy for exponential growth.

 

 

 

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[1] https://economictimes.indiatimes.com/news/economy/foreign-trade/indias-share-in-global-trade-doubled-since-2005-comparatively-moderated-in-last-10-years-report/articleshow/116676603.cms?from=mdr

Bracing for a tougher world order

 

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The benign world that we have been used to for nearly eighty years is about to come to an end. This was the most glorious era, Earth had ever witnessed in terms of the nations of the world coming together to usher in an era of trade, cultural osmosis, incredible scientific discoveries, setting up of global institutions that worked for the collective good of mankind and the emergence of a largely peaceful worldwide climate of aspiring to a tomorrow that is better than yesterday.

This was the era that saw the end of colonialism and the Cold War and the emergence of a global network of trade and commerce that saw wealth creation on an unparalleled scale in nations across the world that had hitherto known only scarcity. This helped millions of people emerge from the shackles of poverty and deprivation and dream big.

It was thought that the international networks of mutual interest had made war and conflict largely redundant and with the emergence of the technology revolution, it was thought the word was on a high speed ride to utopia. But alas, this was all a pipe dream, which is now rapidly unravelling before our eyes.

The post Second World War global order of peace, stability, seamless international trade, the sanctity of international borders and adhering to the rule of law was something that the sole super power of the time the US was largely responsible for putting in place. This seemingly altruistic and benign act on their part was driven by their desire to incentivize the nations of the world to be on their side in their ideological and geostrategic battle against their primary rival, the Soviet Union.

Ever since the collapse of the Soviet Union in 1991, the US has been losing interest in supporting the global order it so carefully nurtured and set up. It may have been done with purely strategic intent, but it enabled Europe and Japan to rebuild their wealth and nations like China and India become formidable economic powers. More importantly it helped economically backward nations to industrialise and raise the living standards of millions and millions of people living in the Third World.

As things stand now a powerful China, which rose to be the second largest economy in the world and a formidable military power on account of the US’s policy of détente initiated in the 1970’s to wean the communist giant away from the Soviet Union is its biggest strategic threat and rival. On the other hand a bitter Russia seething from the loss of its Soviet Empire and the diminishing of its strategic sphere of influence, Eastern Europe has brought the world to the doorstep of a catastrophic Third World War with its dastardly misadventure in Ukraine.

It no longer suits the US to support the global strategic order it had itself carefully built up and it is busy dismantling it. It has withdrawn from the Paris climate accord, exited the WHO, and postponed funding to USA Aid. It has threatened and brow beaten Europe into enhancing their contributions to NATO and to think in terms of being responsible for their own defense at a time when a revisionist Russia threatens to upend East Europe.  

The US of today does not distinguish between foes and allies and wields the stick against both whenever it suits it. In a bid to reduce its humongous debt it has proposed reciprocal tariff on goods and services it imports from nations across the world. The only way around that is to sign bi lateral trade deals with the US on terms that favour the latter.

There is a new world order emerging and it is not a pretty one. It is reminiscent of the way the world was till the era of the two World Wars. This was the time when nations invaded one another and subjugated the defeated nations. It was an era of famines, diseases and horrible genocides. Look at the world around you. Russia and Europe are locked in mortal combat with Europe cowering in fear.  An ambitious China, though beset with demographic problems is casting covetous eyes on not just Taiwan, but also most of its neighbour in almost all geographical directions. The Middle East is a constant cauldron of trouble and much of Africa is in the midst of endemic civil war. The global supply chains are under the severest stress and catastrophic global warming is already upon us. Brace for a tougher world order? That is the least that we can do.

 

How to keep yourself sane and functional in a world of idiots?

 

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We expect people to behave fairly, rationally and normally in their interactions with us. Not an unreasonable expectation considering that we would do just that in our interactions with them. But does that happen? Nah, not at all! How many times have you been let down by colleagues, friends, neighbours and relatives? Way too many times.

You will notice that people you have done favours to, made sacrifices for and helped them in every which way will be never grateful, but may in all likelihood resent you and behave in the most treacherous manner with you. Then there will be a whole horde of people who are both selfish and incompetent-people who would be lost, without your help, but would never realize how much they owe you, leave alone be grateful for what you have done for them.

You will find that the most talented, capable, competent and efficient people will not necessarily progress the most in life. There is no automatic reward for being the best or better than others. Luck plays a huge part in how much people realize their potential. It would be unnatural to not feel bad about such things. But you cannot let the resultant negativity cloud your judgment and veer you off the path that you know is the right one for you and the world.

If you and others like you did not go about performing your duties the right way, the idiots of the world would burn down the world-make no mistake about it. You may feel like Atlas shouldering the weight of the world, but that’s alright-somebody has to do it. Never mind that there are ill mannered people who don’t always pay the price for their boorish behavior, or half-crazy nit wits who drive on the wrong side of the road and never get fined, while you are penalized if you inadvertently jump a mal-functioning traffic light.

You should not be surprised if someone else runs away with the credit for a job well done by you, but remember to not be taken for a ride by that person the next time. The people around you might appear to be nothing but confidence tricksters who seem to surge ahead with their glib talk, but remember that they can get found out and when they do, it won’t be pretty for them. For they may be able to fool some of the people, some of the time, but they won’t be able to fool all the people all the time.

Don’t envy the fool who gets ahead on account of ingratitude, or the idiot who surges ahead of traffic by breaking rules. They will not always be able to ride their luck to success, but will sooner or later get into big trouble.  Let them be and leave them to their own devices while you focus on dong what is right for you.

It is not easy to be calm, collected and equanimous when people around you are so boorish, loud and loutish in their behavior. It is even more difficult to stay calm when what should have been perfectly decent and respectable people lie like common criminals and don’t do the decent thing like any well brought up people are expected to. Don’t remonstrate with such people because they can fall to any depths and would win any argument because reason, logic and truthfulness don’t mean anything to them. They don’t have a moral compass at all.

The best thing for you to do is to completely be oblivious to the very existence of such people. They will in all likelihood get into trouble sooner or later either with someone who is more depraved than them or when they run out of people who can stand the sight of their dishonest selves. But you should not waste any time waiting for them to get their comeuppance.

You should instead be busy doing whatever is of top priority for you-something that takes you closer to your goals in life. Remember our time in this world is limited, you just can’t afford to waste even a second thinking about how someone has wronged you or how that person needs to be taken to task for that.  Every living moment should be spent in doing what serves your best interest. If you are an upright person who progresses in life the right way then that is what you should focus on. Let the others do what they think is right for them and live with the consequences.

Like a surfer who manages to stand upright on the surf board for as long as he or she can by managing the waves coming at them and not fighting them-so should you hang on to your purpose in life even if the idiots of the world who cross your path try to veer you off course.

Solopreneur to Millionaire- Is it possible?

 

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Becoming a solopreneur is the flavour of the times with more and more corporate employees opting out of the 9 to 5 and beyond rat race and striking out on their own. But how successful can they really be as solopreneurs? Can they become millionaires working on their own without any corporate or big brand backing? After all aren’t many of the superstar sportspeople, actors, and authors solopreneurs in a sense? What about the untold riches so many solopreneur You Tubers seem to be making?

The internet has levelled the playing field for all manners of businesses and scaling up massively from next to nothing is no longer a pipe dream, but something that enterprising individuals achieve quite frequently in the online universe.

So is it possible for anyone to become a solopreneur millionaire in today’s times?

In a planet of more than 7 billion people, is it not eminently practical for someone to come up with a sufficiently brilliant solopreneur business idea that addresses some specific need or needs of enough people to help one make a million bucks a year?

Think about it. It doesn’t seem that far-fetched anymore. This is actually a bit like finding life outside the safe confines of planet Earth in a universe teeming with billions of galaxies teeming with billions of solar systems teeming with billions of planets like ours. Is it possible that one would not find life somewhere out there, if one looked hard enough? But the fact is despite all the deep space research and all the probes sent out there, no evidence of life has turned up.

There are however a very large number of real life examples of solopreneurs who have easily made it to millionaire status.  So the chances of your solopreneurship making a millionaire out of you are not at all dismal if you have a great actionable business idea.

It is not enough to have a great business idea that brilliantly addresses a specific need or needs-you need to be sure that it has a market as well. This would mean that there are a sufficiently large number of people out there willing to pay a fair price for what you are offering them.

If your product or service idea is outstanding and you are sure that it has a sizable market as well, you won’t be able to cut it, unless you are able to market and sell effectively.

Once you have all the above under control, you will need to learn financial management to be able to keep your expenses in check, as well as get the pricing right enabling you to hit the sweet spot with your fund-flows-the life blood of a business.

For any business to grow and scale it is important for the entrepreneur in question to learn from market feedback and make the necessary adjustments and improvements to one’s products or services. This is even truer for a solopreneur where the margin for error is very little

Lastly and very importantly no solopreneur can be an island unto themselves and hope to succeed. Networking and networking is indeed the pathway to success for a solopreneur. It opens the doorway to collaborations and ever new opportunities leading to exponential growth.

Do you have it in you to become a solopreneur millionaire? Won’t you like to find out?

Learning to let go for our own sake

 

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We are driven by our ego-our sense of self-worth. This is true of every human being notwithstanding what or who one might be in life. Ego dictates the actions of corporate head honchos and family patriarchs as well as spiritual leaders and the farm labourer toiling in the fields. There is nothing wrong, immoral and unnatural about it, never mind what the purveyors of new-age spirituality ironically heading huge multi-billion business empires might tell you, while doing the exact opposite of what they profess. It is the way that we are programmed to live our lives. It is what it is.

It is, however, important to understand the fact that our actions and those of others are driven by ego to avoid falling into the trap of self-righteousness. This helps you acquire perspective with regard to how you interact with others. No body lives forever and there is a limit to how much a person can accomplish to satiate their ego. This realization can help you avoid stress, conflict and ultimately bad health.

The Buddha advocated the Middle Path or the path of moderation to find peace and balance in life. The Bhagwat Gita advises you to focus on performing your duty and not obsessing over the results or the fruits of your actions. In ancient Greece, moderation was a highly valued virtue that helped one follow an ideal course of action by eschewing excess. The progress that mankind has made over the millennia seems to have dulled our sensibilities to the simple facts about what is really needed to live a content and happy life.

The world today stands at a crossroads. There is climate catastrophe staring us in the face, an imminent unravelling of the global trading systems, and a demographic collapse in nations around the globe makes their future uncertain? How did we come to this pass, where our very existence is threatened? We don’t know if our children and grandchildren will even have access to fresh air and drinkable water, even as demagogue leaders around the world rave, rant and breathe fire.

Collective unchecked human ego and hubris lead the whole world to forget the plain truth that our lives are limited and the Earth’s resources are limited. We cannot become gods. In that sense we are all part of a classical Greek tragedy, where our weakness of character leads us to our doom.

We can rescue ourselves and the world by letting go. We need to tone down our hankering after all manner of achievements and settle for less. That will put less stress on the environment and ourselves. We may experience less fleeting glory, but more peace, contentment and better health. We can do with fewer cars, smaller houses, less gadgets and eating sensibly. There is no need to hoard possession and create idle wealth that no one has access to.

We can be kinder in our interaction with others and not convert everything into a zero sum game. Not doing so only builds up rage and angst inside us that manifests by way of quarrels, disputes and damaged health and vitality. Letting go puts one on the path to heal ourselves mentally, emotionally and spiritually. It would do well to remember the fact that we are mere mortals with limited wherewithal and above all a finite amount of time. We need to be able to make the most of it. Living everyday stress free and with limited achievable ambitions is how we can do it. This is true of us as individuals and as nations. We need to learn to let go. Now.

How can a solopreneur scale up?

 

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The biggest fallacy about solopreneurs is that they cannot scale up. They can and very successfully too. But, first they have to take care of a few things. Let’s see what these are:

1.       Being a solopreneur does not mean going it alone

No man is an island unto himself and that is certainly true of solo entrepreneurs. They cannot be like Atlas shouldering the entire burden of their business on their shoulders. It is neither practical nor sensible to do so and can lead to inordinate stress and burnout. You have got to connect with others of your ilk and find ways to exchange views and collaborate.

Connecting with others online or physically is important to obtain the information necessary to grow and develop in your chosen field of expertise. The more you interact with others-clients, suppliers, vendors, mentors, peers and industry leaders, the more opportunities you would be able to avail of to scale up your business.

2.       You have got to learn all you can

If you are serious about scaling up your business you have got to be serious about learning all you can. You have got to make time for reading the right books, listening to the right podcasts and getting a firm handle on formulating the strategy and tactics that are optimal for scaling up your business. Knowledge is definitely power if you are serious about scaling up your solopreneurship against all odds.

3.       Outsource

It would be a good idea to outsource certain tasks to professionals who are good at them. There are many things like content creation, posting on social media and website maintenance which can be taken care of by professionals while you focus on your core business functions of creating products and servicing your customers. Doing so will help you be more efficient and grow your business.

4.       Automate and Get Organised

Rapid strides in technology have enabled even solopreneurs to deploy CRMs to get the best out of their data, helping them optimise your sales and marketing processes. Importantly, you could also look at automating your emailing, giving your business a leg-up in the process.

5.       Build your Brand

A solopreneur needs to build his or her brand in a manner that its core values are clear to the intended target audience. It goes without saying that you should both know and epitomise those values so that your target audience know of your ability to serve their needs and interests.