Tariffs, Tariffs, Tariffs: What, Why and What Next

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CWA # 1651, 7 April 2025

The World This Week

Tariffs, Tariffs, Tariffs: What, Why and What Next

GP Team

The World This Week #305 Vol. 7 No. 14, 7 April 2025

D Suba Chandran

Tariffs, Tariffs, Tariffs: What, Why and What Next
D Suba Chandran

What happened?
On 2 April 2025, declaring that “foreign trade and economic practices have created a national emergency," US President Donald Trump imposed a series of tariffs “to strengthen the international economic position of the United States and protect American workers.” Trump invoked the American Presidential authority under the International Emergency Economic Powers Act of 1977 (IEEPA) to issue his tariff agenda.

The tariff includes a ten per cent tariff on all countries and an "individualized reciprocal higher tariff on the countries with which the United States has the largest trade deficits.” While the first remains common, the second has different calculations for individual countries.

According to his 2 April announcement, the following goods are not to be a part of tariffs: steel/aluminium articles and autos/auto parts already subject to Section 232 tariffs; copper, pharmaceuticals, semiconductors, and lumber articles; bullion; and energy and other certain minerals that are not available in the US.

According to the announcement, amongst the major countries that trade with the US, Trump has imposed 34 per cent against China and 20 per cent on the EU. In Asia, the tariffs were imposed on Vietnam (46 per cent), Thailand (36 per cent), Indonesia (32 per cent), India (26 per cent), Malaysia (24 per cent), Bangladesh (37 per cent), Taiwan (32 per cent), South Korea (25 per cent) and Japan (24 per cent). With Canada and Mexico, he had imposed a 25 per cent import tariff on goods in early March.

On 3 April, Canada announced 25 per cent auto tariffs on US vehicles. On 4 April, China announced a 34 per cent tariff on all goods imported from the US.

What is the background?
First, the trillion-dollar US trade deficit and Trump’s reasoning for imposing tariffs. According to a Wall Street Journal report, in 2024, the US imported $1.2 trillion more in goods than it exported. The largest US trade deficit in 2024 was with China (USD 295 billion), followed by Mexico (USD 172 billion).

Some of the major deficit goods include machinery, electrical equipment, vehicles, and pharmaceuticals; these four items account for more than 800 USD billion in deficit. The US had trade surpluses mainly in aircraft, mineral fuels, and oil. For Trump, trade deficits with the rest have resulted in “the hollowing out" of the US manufacturing base, leading to a "lack of incentive to increase advanced domestic manufacturing capacity.”

Trump imposed tariffs on Canada, Mexico, and China during February and March. Canada and Mexico were hit with a 25 per cent tariff on goods imported from the two countries. On China, Trump imposed a ten per cent tariff in early February.

Second, securing the American economy and defence argument. Trump has projected the imposition of tariffs as a means to protect American security and its defence industry. For him, the trade deficits have “undermined critical supply chains” and made the US “defense-industrial base dependent on foreign adversaries.” For Trump, increasing domestic manufacturing will address the economy and the US's defence security. According to the latest White House release, to maintain an “effective security umbrella to defend its citizens and homeland, as well as allies and partners, it needs to have a large upstream manufacturing and goods-producing ecosystem…This includes developing new manufacturing technologies in critical sectors like bio-manufacturing, batteries, and microelectronics to support defense needs.” For Trump, tariffs are the “Golden Rule” for the US’ “Golden Age.”

Third, the “treat us like we treat you,” “unfair global trade order” and “America First Trade Policy” narrative. Even before becoming the President for the second term, Trump, during his campaign, emphasized on "reciprocal tariff," especially via-a-vis EU and China and complained that some countries had a higher tariff on the US goods, while the US imposed less or no tariffs on goods imported from them. According to the White House press release, issued on 2 April, the US companies “pay over $200 billion per year in value-added taxes (VAT) to foreign governments—a “double-whammy” on US companies who pay the tax at the European border, while European companies don’t pay tax to the United States on the income from their exports to the US.” A larger conclusion by Trump is that the “current global trading order allows those using unfair trade practices to get ahead, while those playing by the rules get left behind.” The "America First Trade Policy Report" submitted to the President, makes a case for Trump by arguing the following: "for decades, the United States has shed jobs, innovation, wealth, and security to foreign countries who have used a myriad of unfair, non-reciprocal, and distortive practices to gain advantage over our domestic producers.”

Fourth, "Made in America" as part of the MAGA campaign. One of Trump's primary reasons for imposing tariffs is his belief that they will increase manufacturing in the US, thereby leading to Make America Great Again. For him, tariffs are a means to achieve his MAGA campaign.

What does it mean?
First, the larger implications for the economic order that was built with the US lead. Trump’s willingness to break the economic order and the strategic partnerships that Washington has built over year from Europe to East Asia should underline the new “transactional” US that the world will have to deal with. The trade reverberations will have its implications also on the political order.

Second, the immediate despair and the long-term gloom. The immediate responses in the stock markets should highlight the aftershocks of Trump’s tariffs. From New York to Tokyo, there has been a tumbling. How the global economy will respond in the long run requires more time to study and analyse the fallouts.

Third, the tariff focus on Asia. While Mexico, Canada, China and the EU were at the initial receiving end of Trump's accusations, the final list of tariffs has a larger focus on Asia – Japan, South Korea, Taiwan, Vietnam, Indonesia and India. The US is a major trading partner for all these countries; they also consider the US a strategic partner. Will a negative output on the former impact the latter is something that needs to be seen? It is also possible that the latter – the need to have a strategic partnership with the US may force these countries to take a tough pill on the former.

Fourth, the differing responses. While China has slapped counter-tariffs immediately, the EU is taking time to impose and still having an internal dialogue. Malaysia, which holds the ASEAN Chair, is considering a collective position to have better bargaining. Some countries have already lowered the tariff, and some are willing to negotiate with the US. The responses so far would reveal the huge divide amongst the rest of the world regarding how to deal with Trump.

TWTW Regional Roundups

News from around the world
Padmashree Anandhan, Rohini Reenum, Fleur Elizabeth Philip, Femy Francis, Abhiruchi Chowdhury, Anu Maria Joseph, Nuha Amina, Ayan Datta, C Shraddha, and Nova Karun K

CHINA THIS WEEK
China: Dispatches the first batch of aid to Myanmar
On 31 March, China’s International Development Cooperation Agency informed that they have sent the first batch of aid to Myanmar. They stated that this has been done at the request of Myanmar’s administration, and China is donating USD 13.77 million for emergency humanitarian assistance. The aid includes tents, blankets, first-aid kits, and other essentials. Myanmar was hit by a 7.7 magnitude earthquake; the tremors were felt in Thailand and regions of China. China previously also sent 88 personnel for rescue efforts in Myanmar.

China: China-Russia are “friends forever, never enemies,” says Foreign Minister
On 01 April, China’s Foreign Minister, Wang Yi stated that China-Russia are “friends forever, never enemies.” He made this statement during his visit to Moscow, where he said: “The principle of 'friends forever, never enemies' ... serves as a solid legal basis for advancing strategic cooperation at a higher level.” Wang Yi also stated that with the current global atmosphere, big powers are obliged to act as a stabilizing factor and therefore urged the US and Russia to improve their relationship. He said: “(This) is good for stabilizing the balance of power between major powers and inspires optimism in a disappointing international situation.”

China: holds economic dialogue with Japan and South Korea in response to Trump tariffs
On 30 March, China, Japan and South Korea held their first economic dialogue for the first time in five years. This meeting is aimed at bracing themselves for tariffs by US President Donald Trump. The meeting was attended by Trade Ministers of Japan, South Korea and China, and the meeting was held in Seoul, South Korea. The heads all agreed that they would closely cooperate for comprehensive high-level discussion for a Free Trade Agreement between the three countries. South Korean Trade Minister Ahn Duk-Geun said: “It is necessary to strengthen the implementation of Regional Comprehensive Economic Partnership (RCEP), in which all three countries have participated, and to create a framework for expanding trade cooperation among the three countries through Korea-China-Japan FTA negotiations.”

Taiwan: Foreign Ministry welcomes EU’s resolution opposing change in Taiwan’s status quo
On 02 April, Taiwan’s Ministry of Foreign Affairs welcomed two EU resolutions supporting ties with Taiwan and expressing concern over China escalating tensions in the Taiwan Strait. The European Parliament passed the motions under its annual Common Foreign and Security Policy (CFSP) and Common Security and Defence Policy (CSDP). The CFSP resolution criticized China’s misinterpretation of UN resolution 2758 and its “increasing breadth and intensity of operations,” including cyberattacks and misinformation campaigns, and opposed any unilateral changes to the Taiwan Strait status quo through force or coercion. The CSDP resolution called for “regular exchanges” with Taiwan on security and cooperation in countering disinformation and foreign interference, urging China to cease aggressive provocations such as intrusions into Taiwan’s air defense identification zone and maritime operations. Foreign Minister Lin Chia-lung thanked the European Parliament for bolstering Taiwan-EU relations and affirmed Taiwan’s commitment to reinforcing democratic resilience.

Taiwan: Trump imposes 32 per cent reciprocal tariffs on Taiwanese goods
On 02 April, US President Donald Trump announced a 32 per cent tariff on Taiwanese goods to reduce trade deficits with other nations. The tariffs were imposed in response to Taiwan’s 64 per cent tariff on US goods. Taiwan’s exports to the US rose to USD 116.26 billion, mainly comprising steel, automated data processing equipment, and computer components. Trump’s executive order stated that trade disparities threaten US national security and the economy. Other countries, including China (34 per cent), South Korea (25 per cent), Vietnam (46 per cent), Japan (24 per cent), and Thailand (36 per cent), will face higher duties starting 09 April, in addition to a baseline 10 per cent tariff set to take effect on 05 April. Some countries, such as China, South Korea, and Japan, have coordinated responses, while others, like Canada and Mexico, plan retaliatory tariffs.

China: Muhammad Yunus invites China to invest in Bay of Bengal
On 01 April, The Indian Express reported on Bangladesh’s head of interim government inviting China to build an economic base in Dhaka and in Bay of Bengal. . Yunus said: “Seven states of India, eastern part of India, called seven sisters… they are landlocked country, landlocked region of India. They have no way to reach out to the ocean.” He also reinstated that Bangladesh is the only guardian of the ocean region. Therefore, he invited China to build, produce, and market things. While wrapping up his visit, he noted that his country must consider China as an important friend and that their relationship has grown over the years.

EAST ASIA AND PACIFIC THIS WEEK
South Korea: US imposes 25 per cent reciprocal tariffs
On 02 April, US President Donald Trump imposed reciprocal tariffs of 25 per cent on exports from South Kora. This decision was taken to reduce trade deficits and bolster domestic manufacturing. The tariffs will take effect from 09 April. Some goods, such as steel, aluminium, automobiles, and key auto parts, remain exempted. Trump justified the measures under the International Emergency Economic Powers Act of 1977, stating that trade barriers have forced massive imbalances.

South Korea: President vetoes the Commercial Act Revision, signs pension reform bill
On 01 April, South Korea’s acting president, Han Duck-soo vetoed an opposition-led revision of the Commercial Act. The act required corporate boards to act in the interests of company shareholders, and was vetoed citing risks to competitiveness and the national economy amid heightened uncertainty. This veto was criticized by opposition parties who claim it protects vested interests, while the ruling People Power Party plans an alternative revision targeting listed companies only. At the same Cabinet meeting, Han signed a pension reform bill into law that will raise the pension contribution rate from 9 per cent in 2025 to 13 per cent in 2033 and the income replacement rate to 43 per cent starting in 2026.

Japan: Fair Trade Commission subjects Apple and Google to IT regulation and competition law
On 31 March, Japan’s Fair-Trade Commission announced that Google and Apple will be subject to the Act on Promotion of Competition for Specified Smartphone Software. This act is aimed at regulating IT giants and enhancing competition in the app market. Enacted in June 2024, the law targets firms with over 40 million monthly users per category and prohibits restricting alternatives in app stores and search engines. The Fair Trade Commission announced that Apple, its subsidiary, iTunes, and Google will face restrictions in the app store sector, preventing them from blocking alternative stores and in-store payment systems. Google will also be restricted in search engines, prohibiting it from prioritizing its services in search results without justification. The commission will release guidelines before the law takes effect by December 2025.

Japan: Government looks to retaliate to US’s 24 per cent reciprocal tariffs
On 02 April, US President Donald Trump announced a 24 per cent duty for Japan to reduce trade deficits. Trade Minister Yoji Muto said this “requires a careful, yet bold and speedy approach” and that the prime minister has instructed officials to consider all possible responses, including retaliation, while weighing the interests of Japan and the US. The new tariff regime has led to a drop in Japan’s Nikkei 225 index below 35,000. Chief Cabinet Secretary Yoshimasa Hayashi expressed serious concerns about these measures’ consistency with WTO agreements and the Japan-US Trade Agreement, while the trade ministry has set up a task force to assess the impact on affected companies.

Samoa: declares State of emergency for 30 days amid severe power crises
On 31 March, the Samoan government declared a 30-day state of emergency as the main island of Upolu faced a severe power crisis. Prime Minister Fiame Naomi Mata’afa said faults in the underground cable between the Fiaga and Fuluasou power plants, severe weather damaging power lines and poles, and the failure of three key backup generators have led to major disruptions. Power rationing has been in place since February, and the crisis is estimated to cost up to 16 per cent of Samoa’s GDP. Finance Minister Lautimuia Uelese Vaaio supported the declaration to allow development partners to assist. Temporary large generators will arrive on 5 April, with permanent generators expected in August. The state of emergency is effective until 29 April.

Kiribati: First-of-its-kind Data Protection Bill clears initial reading
On 01 April, Kiribati legislators unanimously passed a first-of-its-kind Data Protection Bill during its first reading. Former education minister Alexander Teabo authored the proposal. Teabo aimed to protect public information, such as personal data collected by government officials, particularly in the health sector. He said the bill attempts to “protect our people” and “safeguard our citizens' data.” According to Teabo, the bill draws similarities to Australia's and New Zealand’s privacy acts. It is crucial for building trust in digital services and ensuring that personal information is not misused. The bill is set to proceed to its second reading. First-time Kiribati MP Ruth Cross Kwansing said: “It is a law to protect people's personal information online and in databases. It builds trust in digital services, protects citizens, and enables economic growth.”

SOUTHEAST AND SOUTH ASIA THIS WEEK
Indonesia: Government looks to negotiate a deal with the US after the announcement of reciprocal tariffs
On 04 April, the Indonesian government pledged to ease the trade rules and is open to negotiating with the US after the latter imposed 32 percent tariffs. President Prabowo Subianto along with his cabinet and the Ministry of Economic Affairs, plan to simplify regulations which include non-tariff barriers. The government is calculating the impact of the tariff, which will hit export-reliant industries like textiles, electronics, and palm oil. An official delegation is set to travel to the US to negotiate the tariffs, which are to take effect on 09 April. Minister of Economic Affairs Airlangga Hartarto had a video conference with the US Representative Carol Miller, before the tariff announcement and discussed potential areas of cooperation between the two nations.

Myanmar: United Nations Chief of Aid to visit Myanmar for providing assistance to earthquake survivors
On 04 April, according to UN Secretary-General Antonio Guterres, United Nations Chief of Aid, Tom Fletcher would visit Myanmar to support the people who survived the earthquake. Guterres has appealed for more international funding and rapid aid to be provided to the country. Guterres’ Special Envoy for Myanmar, Julie Bishop, will also be traveling to Myanmar soon. Guterres said: “I appeal for every effort to transform this tragic moment into an opportunity for the people in Myanmar.” He also appealed to all the international communities to step up and contribute funds needed for all that suffer from the earthquake.

India Finalizes comprehensive economic partnership agreement with Chile
On 1 April, Indian Prime Minister Narendra Modi and President of Chile Gabriel Boric Font announced the commencement of negotiations for a comprehensive economic partnership agreement (CEPA). Both sides have agreed to strengthen partnerships in the areas of critical minerals and establish strong supply and value chains. They will also advance cooperation in agriculture and defense. Increased cooperation will also be established to tackle common concerns like terrorism, organized crime, and drug trafficking. In a statement, PM Modi highlighted readiness to share India’s experience in “Public Infrastructure, Renewable Energy, Railways” and Space among others, with Chile. The PM also alluded to both sides inking a letter of intent titled “Gateway to Antarctica.” Chile’s geographical proximity to Antarctica serves as a corridor to the same. Key cities like Punta Arenas serve as major locations for expeditions and scientific trips to Antarctica.

Nepal: 10 MoUs inked with India, eight agreements with Thailand
On 2 April, Nepal and Thailand signed eight agreements on the sidelines of the sixth Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (Bimstec) summit. After delegation level discussion between Prime Minister KP Oli Sharma and his counterpart Paetongtarn Shinawatra, both sides entered into two government-level and six private sector agreements. They were linked to cooperation in education, tourism, trade, agriculture and civil aviation.

On 1 April, India, and Nepal inked 10 MoUs valued at NPR 625 million for community development projects. An official notification from the Indian embassy in Kathmandu indicated agreements for development in cultural sectors, health, and education. According to an X post the “High Impact Community Development Projects (HICDP)” are being built via Indian financial assistance under the Nepal-India Development Cooperation initiative. To date, India has taken up 573 HICDPs in Nepal since 2003, of which 495 have been completed.

Bhutan: Gelephu International airport project to commence from July
On 3 April, Kuensel Online reported that the Gelephu International Airport is expected to be completed by July. The airport is a part of the Gelephu Mindfulness City initiative which is expected to open by 2029. The runway and terminal will handle flights to Southeast Asia, the Middle East, and Europe. Stretching across 2,250 acres, the airport will be designed in collaboration with a Netherlands-based airport consultancy and engineering firm, and Changi Airports International of Singapore. It is expected to handle 123 flights and serve 1.3 million passengers by 2040.

Pakistan: PM Sharif content over improving ties with Bangladesh
On 31 March, PM Sharif spoke over the telephone with Chief Adviser of Bangladesh Government Muhammad Yunus and sent his “greetings” for Eid. As per Dawn, Bangladesh-Pakistan relations have seen a turnaround after the former Prime Minister Sheikh Hasina was ousted from power. Sheikh Hasina’s Awami League was known to be closer to India. After Hasina’s ousting, there has been a considerable enhancement in “trade and bilateral” ties between Bangladesh and Pakistan. PM Sharif has expressed content over how the ties between the two countries especially in “trade and travel” are strengthening. Both the leaders have reiterated their shared vision to enhance bilateral ties. PM Sharif also stated that the country is “looking forward” to Deputy PM and Foreign Minister Ishaq Dar visiting Dhaka in April. Further he stated that a “trade delegation” would be traveling along with him. He also extended an invitation to a “cultural troupe” from Bangladesh to visit Pakistan.

Pakistan: International media houses raise concerns over Pakistan’s Afghan deportation policy
On 31 March, Dawn reported on the concerns voiced by international media over deportation of Afghan refugees. After 31 March, those who are in possession of Afghan Citizen Cards will have to leave Pakistan in order to avoid forceful deportation. An article published by the UK’s Guardian termed Pakistan’ repatriation plan as “draconian.” It pointed out how close to “60 female activists and human rights defenders” who backed “women’s education” are under the risk of getting sent back to Afghanistan. Other international media houses such as Australian ABC news, Qatar’s Al Jazeera and US’s CNN have highlighted how women who do not adhere to fundamentalist Islamic values are under the threat of getting deported to Afghanistan which is currently being ruled by the Taliban. Those Afghans who had helped US’s occupation of Afghanistan are also expected to be on the radar of the Taliban government.

Pakistan: Bangladesh, Pakistan and Sri Lanka stock exchanges enter tripartite agreement
On 1 April, a press release from the Dhaka Stock Exchange (DSE) announced an agreement signed with the Pakistan Stock Exchange and the Colombo Stock Exchange to boost cooperation among the three. This agreement aims to foster technology development and sharing, human resource collaboration, investor protection, and data exchange across bourses. Speaking at the signing ceremony, Securities and Exchange Commission of Pakistan (SECP) Chairman Akif Saeed expressed how “mutual experience-sharing and joint investments in technology” of the stock markets will enable the development of “strong and efficient capital markets in their respective countries.” As a part of the occasion, a panel discussion titled “Navigating Frontier Capital Markets: How Evolving Market Regulation and Exchanges Foster Efficient Capital Market Development” was organized. While attending the event, DSE Chairman, Mominul Islam highlighted the “technological and operational constraints” of “South Asian stock exchanges —except for India” and the importance of overcoming them to unlock the immense potential of the markets.

Pakistan: Record high remittances received in March
On 3 April, `Dawn reported a record inflow of USD 3.5 billion in remittances in March. The 15 per cent increase in inflow on a month-on-month basis has largely been driven by Ramzan. It serves as a relief for the government as it eases the external debt repayment burden and supports the exchange reserves. General Secretary of Exchange Companies Association of Pakistan, Zafar Paracha indicated a sale of around USD 450 million “to banks in March — significantly higher than in February and much higher than March 2024.” Moreover, the government has set USD 35 billion as the remittance target for the current fiscal. However, Paracha expects the inflow to exceed this estimate, perhaps reaching USD 36 billion. Besides, Pakistan has been witnessing a steady rise in inflows during the first eight months of fiscal 2025, marking a collective increase of 32.5 per cent. During this period, a significant volume of remittances have been sourced from the UAE and Saudi Arabia jumping by 56 per cent to USD 4.85 billion and at 34.6 per cent to USD 5.89 billion, respectively.

Iran: Iran wants to engage in “direct talks” with the US, says President Trump
On 3 March, US President Donald Trump claimed that despite earlier expressed inhibitions, Iran wants to now engage in “direct talks” with the US. He made these claims to the reporters amid escalating tensions between the two countries and exchange of mutual threats. He also argued that direct talks would be “faster” and foster more understanding between the two countries. Earlier, Trump had sent a letter to Iran regarding nuclear deal negotiations. However, Iran had rebuffed this attempt. Separately, on 2 March, French Foreign Minister Jean-Noel Barrot cautioned the parliament that the “window of diplomacy” with Iran on nuclear talks was “narrow” and that a failure to negotiate would render a “direct military confrontation almost inevitable.”

AFRICA THIS WEEK
Africa: US imposes 50 per cent reciprocal tariffs on Lesotho
On 3 April, the US Trump administration imposed a 50 per cent tariff on Lesotho, the highest levied on any country. The country highly relies on exports, which contribute USD two billion to its GDP. In February, Trump mocked Lesotho as a country “nobody has ever heard of.” The Trump tariffs were calculated based on the US trade deficit with each country divided by the total value of imports from that country. Therefore, smaller countries with very limited imports from the US have been affected heavily. Lesotho’s trade surplus to the US is driven by diamonds and textiles. In 2024, according to Oxford Economics, Lesotho’s export to the US stood at USD 273 million, which is almost ten per cent of its GDP. Many fear that the high tariffs on Lesotho and several other smaller African countries imply the end of the African Growth and Opportunity Act (AGOA). Besides Lesotho, Trump has imposed tariffs on Kenya, Ethiopia, and Ghana (ten per cent), and South Africa (31 per cent).

Egypt: IMF grants USD 1.2 billion as part of the EEF programme
On 4 April, Africanews reported that Egypt received USD 1.2 billion disbursement from the International Monetary Fund (IMF) as part of the Extended Fund Facility (EFF) programme. The disbursement is part of a USD eight billion in 46-month EFF introduced in March 2024. Additionally, the IMF approved a USD 1.3 billion investment as part of the Resilience and Sustainability Facility (RSF) to support long-term economic resilience and sustainability initiatives. Egypt has been implementing new economic reforms with the IMF’s guidance to address the high inflation and foreign currency shortages.

EUROPE THIS WEEK
France: Presidential Candidate Marine Le Pen to face trials for embezzlement
On 01 April 2025, France Presidential candidate, Marine Le Pen, wouldface the Court of Appeals in Paris on charges of embezzlement. The second trial is likely to take place by early 2026, and the court would conclude by 2027, before the election. The decision from the court can change the situation for the far-right party, but Marine Le Pen will either have to be acquitted or given a sentence that allows her to run for office and continue campaigning. Without the immediate effect of suspension, Le Pen will have to consider giving up her spot for a replacement.

The EU: Announces economic partnership with Central Asian countries at the Samarkand summit
On 04 April, the EU announced a partnership with Central Asia, at a debut summit in Samarkand, Uzbekistan. The first EU-Central Asia summit held discussions between EU President Antonio Costa and President of the European Commission, Ursula Von der Leyen, along with the leaders of Kazakhstan, Turkmenistan, Tajikistan, Kyrgyzstan, and Uzbekistan. This summit took place after the announcement made by US President Donald Trump on the reciprocal tariffs imposed on the rest of the world. Costa spoke about the security challenges, threats against violence, terrorism, and drug trafficking, which risk spillovers from both Central Asia and Europe. He said: “Your strategic location can open global trade routes and flow of investments, which will enhance sovereignty. This will strengthen your economies, and will also make new friendships.” Von der Leyen said: “This partnership will lead to new opportunities in sectors like energy, tourism, trade, and transport, and a EUR 12 billion investment package for the region.”

About the Authors
D Suba Chandran is Professor and Dean of School of Conflict and Security Studies, National Institute of Advanced Studies (NIAS). Padmashree Anandhan and Anu Maria Joseph are Project Associates at NIAS. Rohini Reenum is a Doctoral Student at NIAS. Femy Francis, Nuha Aamina, and Abhiruchi Chowdhury are Research Assistants at NIAS. Nova Karun K is a postgraduate student at Pondicherry University. Fleur Elizabeth Philip and C Shraddha are Research interns at NIAS.