What is the story about?
US President Donald Trump's tariffs have no winners and are a lose-lose arrangement for all parties involved, whereas the approach that India, the United Kingdom, and the European Union (EU) have taken to trade is not just a win-win arrangement bilaterally but also a counterpoint to the trade philosophy that the United States is advancing, Sir Anton Muscatelli, the President of the Royal Society of Edinburgh and Distinguished Honorary Professor, University of Glasgow, has said.
In an interview with Firstpost, Muscatelli said that India's trade deals with the UK and the EU offset the disruption that Trump's tariffs have unleashed.
"These trade deals —between India and the UK, the EU, the UAE, and Australia— are really important because they offset the strategic disruption of the new American approach to trade. The Indian approach will hopefully demonstrate to the United States that a free-trade approach is more beneficial to growth and development than protectionism, which is a lose-lose approach," said Muscatelli, an economist.
Muscatelli joined the interview on a video call from Scotland at a time when the world is navigating the economic disruption caused by the American-Israeli war on Iran, the biggest shock since the Covid-19 pandemic and Russia's full-scale invasion of Ukraine.
ALSO READ — ‘Mother of all deals’: India-EU partnership emerges as geopolitical stabiliser in fractured world
Instead of joining hands with partners, Muscatelli flagged, the United States has doubled down on a tariff-led trade policy in the name of America First.
But do tariffs actually benefit Americans? Muscatelli said that while countries losing exports to the United States are clear losers, American businesses and consumers are losers as well.
"Tariffs have made goods more expensive for American consumers because goods, as well as raw and intermediate inputs, have become more expensive, and these go into the making of finished consumer goods. The American automobile industry has been hit very hard by tariffs on Canada and Mexico — the three countries had a closely linked automobile production ecosystem," said Muscatelli.
The data over the past 16 months is damning, and the sector hit hardest is the one Trump sought to help in the first place: manufacturing.
As per the Trump administration's own data, American factories lost 98,000 jobs in the first year of the tariff regime, and researchers at the Advancing American Freedom Foundation concluded that tariffs meant the economy did not create up to 1 million jobs that it would otherwise have created in the absence of tariffs.
Muscatelli argued that the Trump administration was pursuing the mercantilist policies of the 18th and 19th centuries.
Under the mercantilist approach, as in Trump's present-day neo-mercantilist approach, states pursue the maximisation of exports and the minimisation of imports through regulations and other interventions such as tariffs, rather than pursuing mutually beneficial free trade.
Trump is upending conventional economic wisdom, as free trade is a win-win approach under which all sides benefit, according to Muscatelli.
In contrast to the Trump administration, Muscatelli said, the India-UK trade deal has leveraged each country's strengths for mutual benefit — India and the UK signed the Comprehensive Economic and Trade Agreement (CETA) on July 24, 2025, and it will go into effect on July 15.
"The India-UK deal grants India access not only to traditional areas of strength, such as textiles, but also to emerging sectors where India has been building capabilities, such as engineering goods and chemicals. At the same time, for the UK, the deal opens up a large and growing market in areas such as financial services, where the UK is strong."
"The two countries also have complementary ecosystems to pursue AI together, leveraging the UK's status as a leading AI research hub and India's human resources. What also sets the India-UK deal apart is its scope, as the deals with Australia and the UAE were quite narrow," said Muscatelli.
Indeed, Union Trade Minister Piyush Goyal last week described the India-UK deal as the most comprehensive trade agreement India has entered into so far.
While many observers have dubbed the India-EU and India-UK trade agreements a product of Trump's tariffs, Muscatelli said these were organic deals that had been pursued for a long time. He said that while the UK has been preoccupied with achieving stronger growth post-Brexit, these deals are also part of India's long-term growth ambitions.
India's deals with the UK and the EU are part of the global realignment influenced by Trump's tariff war. A host of countries are seeking bilateral and multilateral agreements to explore new export markets, secure new sources of imports, and 'US-proof' their economies. For example, even as India is pursuing a trade deal with the United States, talks are also ongoing with Canada, South Africa, Chile, Israel, and others.
Over time, such a network of agreements will strengthen multilateralism, which is critical to economic growth.
"Multilateral architecture is really important because it brings benefits to all of us. The post-World War II free-trade architecture shaped by the WTO, the IMF, and the World Bank has lifted more people out of poverty than at any other time in history. We need to return to this free-trade-based thinking, which goes back to Adam Smith and The Wealth of Nations," said Muscatelli.
In an interview with Firstpost, Muscatelli said that India's trade deals with the UK and the EU offset the disruption that Trump's tariffs have unleashed.
"These trade deals —between India and the UK, the EU, the UAE, and Australia— are really important because they offset the strategic disruption of the new American approach to trade. The Indian approach will hopefully demonstrate to the United States that a free-trade approach is more beneficial to growth and development than protectionism, which is a lose-lose approach," said Muscatelli, an economist.
Muscatelli joined the interview on a video call from Scotland at a time when the world is navigating the economic disruption caused by the American-Israeli war on Iran, the biggest shock since the Covid-19 pandemic and Russia's full-scale invasion of Ukraine.
ALSO READ — ‘Mother of all deals’: India-EU partnership emerges as geopolitical stabiliser in fractured world
Instead of joining hands with partners, Muscatelli flagged, the United States has doubled down on a tariff-led trade policy in the name of America First.
But do tariffs actually benefit Americans? Muscatelli said that while countries losing exports to the United States are clear losers, American businesses and consumers are losers as well.
"Tariffs have made goods more expensive for American consumers because goods, as well as raw and intermediate inputs, have become more expensive, and these go into the making of finished consumer goods. The American automobile industry has been hit very hard by tariffs on Canada and Mexico — the three countries had a closely linked automobile production ecosystem," said Muscatelli.
The data over the past 16 months is damning, and the sector hit hardest is the one Trump sought to help in the first place: manufacturing.
As per the Trump administration's own data, American factories lost 98,000 jobs in the first year of the tariff regime, and researchers at the Advancing American Freedom Foundation concluded that tariffs meant the economy did not create up to 1 million jobs that it would otherwise have created in the absence of tariffs.
Trump taking world back to 18th century, India and UK show the right way
Muscatelli argued that the Trump administration was pursuing the mercantilist policies of the 18th and 19th centuries.
Under the mercantilist approach, as in Trump's present-day neo-mercantilist approach, states pursue the maximisation of exports and the minimisation of imports through regulations and other interventions such as tariffs, rather than pursuing mutually beneficial free trade.
Trump is upending conventional economic wisdom, as free trade is a win-win approach under which all sides benefit, according to Muscatelli.
In contrast to the Trump administration, Muscatelli said, the India-UK trade deal has leveraged each country's strengths for mutual benefit — India and the UK signed the Comprehensive Economic and Trade Agreement (CETA) on July 24, 2025, and it will go into effect on July 15.
"The India-UK deal grants India access not only to traditional areas of strength, such as textiles, but also to emerging sectors where India has been building capabilities, such as engineering goods and chemicals. At the same time, for the UK, the deal opens up a large and growing market in areas such as financial services, where the UK is strong."
"The two countries also have complementary ecosystems to pursue AI together, leveraging the UK's status as a leading AI research hub and India's human resources. What also sets the India-UK deal apart is its scope, as the deals with Australia and the UAE were quite narrow," said Muscatelli.
Indeed, Union Trade Minister Piyush Goyal last week described the India-UK deal as the most comprehensive trade agreement India has entered into so far.
While many observers have dubbed the India-EU and India-UK trade agreements a product of Trump's tariffs, Muscatelli said these were organic deals that had been pursued for a long time. He said that while the UK has been preoccupied with achieving stronger growth post-Brexit, these deals are also part of India's long-term growth ambitions.
India's deals with the UK and the EU are part of the global realignment influenced by Trump's tariff war. A host of countries are seeking bilateral and multilateral agreements to explore new export markets, secure new sources of imports, and 'US-proof' their economies. For example, even as India is pursuing a trade deal with the United States, talks are also ongoing with Canada, South Africa, Chile, Israel, and others.
Over time, such a network of agreements will strengthen multilateralism, which is critical to economic growth.
"Multilateral architecture is really important because it brings benefits to all of us. The post-World War II free-trade architecture shaped by the WTO, the IMF, and the World Bank has lifted more people out of poverty than at any other time in history. We need to return to this free-trade-based thinking, which goes back to Adam Smith and The Wealth of Nations," said Muscatelli.
