Beyond the Tariffs

Executive Summary Businesses are today exposed to trade policy risks via four recurring choke points: physical, raw materials, technology and human capital .

Interdependence has been weaponised through control over both, trade channels and specific chokepoints .

US tariff policy increasingly reflects a domestic political struggle between the White House, Congress and the Supreme Court .

Businesses should plan for a range of US tariff rates, roughly from 10% to 25% , with zero-tariff territory now effectively off the table.

De-dollarisation is reflected most clearly in central bank reserves, where gold has overtaken US Treasuries by value . Non-dollar trade invoicing and alternative payment systems have been slower off the ground.

India's own tariff wall and quality control orders can either amplify or dampen external shocks.

. For decades, businesses have mainly planned around a rules-based, if imperfect, global trading order. This assumption has broken down in the last two years. Ad-hoc tariff actions, including a steep proposed tariff on Indian oil imports tied to Russian purchases; a yet-to-be-finalised bilateral trade deal with America; and a broader retreat from predictable multilateralism have transformed trade policy from a stable backdrop to a moving variable. Anupam Manur examined how businesses can assess and counteract their geopolitical exposure in this age of uncertainty.

Trade as an Attack Surface Global trade integration rose sharply between 1991 and 2008, but the process then slowed considerably, owing to the Global Financial Crisis, the Eurozone crisis and Brexit, coupled with the rise of authoritarian parties and institutions. Institutions such as the UN, the WTO and the IMF, once considered the bearers of the rules-based order, weakened as US backing receded. In the years since, geopolitics has turned increasingly transactional, and tariffs, which were once mainly a protectionist measure, now function as a tool of leverage. The founding logic of the European Union was that if countries traded enough with each other, the propensity to go to war would fall dramatically, and this worked; the WTO and GATT were built on the same ideology. This logic has now inverted into weaponised interdependence , which works through the ‘panopticon effect’ and the ‘chokepoint effect’.

The panopticon effect follows from exercising control, for example over a trade channel. Whoever controls it holds the data and can see everything that flows through. Bab-el-Mandeb and the Strait of Hormuz are physical versions of this, while AI data centres and payment channels such as Google Pay are its digital equivalents.

The chokepoint effect follows a similar logic, since whoever holds a particular channel can also cut others off from it. The US did this when it suspended export licences for Anthropic's Fable model in June 2026. The dollar is also a chokepoint since global finance flows through the US banking system, giving Washington visibility over where money moves and the ability to cut off access, as it did when it removed Russia from the SWIFT system.

From a Rate to a Range Businesses are exposed to tariffs both directly and indirectly, given that the cost will eventually work its way into input and output prices. Tariffs on Indian goods entering the US have recently turned volatile, reflecting an ongoing struggle between the White House, Congress and the Supreme Court. Today, an exporter can send a shipment to the US under one tariff regime and have it arrive under another regime, given how often the rates tend to change. For businesses, the most sensible approach may be to wait and watch, while planning for a range of tariffs, say in the region of 10-25%, with the zero-tariff territory of earlier decades off the table.

Four Channels, Four Chokepoints Even distant conflicts can impact businesses, typically through one of four channels:

Prices: Crude, LNG, LPG, fertiliser and edible oil prices spike and then mean-revert. Prices can usually be hedged, though close to 90% of India's imported LPG transits Hormuz, with few alternatives.

Logistics: Freight rates and war-risk insurance tend to be sticky, since premiums often outlast the event that caused them. Bab-el-Mandeb's share of the global seaborne trade fell from 10% to 3% during the Red Sea attacks and has not recovered, with Cape rerouting adding 10-14 days to the average voyage.

Payments: Sanctions and reserve freezes can deeply impact economy- and business-level outcomes, as Russia found when it was cut off from SWIFT in 2022.

Rules: Export controls, sanctions and tariffs cannot be hedged, and can only be diversified against.

These channels of exposure run across, and deeply into, supply chains. For instance, China accounts for 18.4% of India's total imports, but a far higher share of its imports of pharmaceutical ingredients, rare earths and critical minerals. This means that a range of industries, not just end-users such as pharmaceuticals, are deeply exposed to concentrated risks. Export controls can cut off access to technology faster than a tariff hike can. Visa curbs can stall work on key projects overnight, such as it did with Bangalore’s metro, since the machinery needs Chinese technicians to service it.

A Retreat from the Dollar The global financial system's reputation for neutrality – and trust in the dollar system specifically – took a severe hit in February 2022, when the US froze $300 bn of Russian central bank reserves. The subsequent pick-up in de-dollarisation is playing out in three distinct ways. The first – trade invoiced outside the dollar – has been the slowest off the blocks. For instance, India's rupee settlement experiment with Russia stalled because Russia had no real use for the rupees it accumulated. The second, alternative payment plumbing such as CIPS and mBridge, is developing slowly. The third channel of de-dollarisation is via central bank reserve allocation. By the end of 2025, gold (27% of the total) overtook US Treasuries (22%) in world reserves by value, according to ECB estimates, and central banks have been adding roughly 1,000 tons of gold to their reserves every year since 2022.

Indian Tariff Walls Many of the shocks buffeting the global trading system may originate in Washington DC, but New Delhi continues to amplify some of them. For example, India's average most favoured nation (MFN) tariff rate, which applies to nearly all its major trade partners, remains very high at 15.8%. Its trade-weighted average tariff rate of 7.9% is also high by comparison. Only 4% of Indian tariff lines admit goods duty-free, against 47.5% for the US; and its bound rate of 48.5% leaves room to roughly triple applied tariffs without breaching any WTO commitment. Preferential access under schemes such as the GSP was repeatedly offset by rising non-tariff barriers and price caps on American goods, until the US responded with tariff hikes.

Quality control orders have followed a similar arc, with the total number of such orders increasing from just 14 in 2017 to around 800 by mid-2025, extending well beyond safety norms to cover a range of ‘critical’ goods. Even after a part-reversal in November 2025, which removed BIS certification requirement for over 25 industrial raw materials, these orders continue to affect business operations. Tellingly, a group of Japanese manufacturers in India, meeting with the Union Commerce Minister, recently flagged the issue.

Where Businesses Should Act Five practical disciplines can help businesses reduce risk across various exposure channels:

Put change-in-law and duty-adjustment clauses in every contract delivering beyond 90 days. The tariff rate applicable to an invoice is determined by the date of entry, not by the order or shipping date.

Map suppliers by legal jurisdiction. Risks tend to be concentrated in the supplier's jurisdiction, not its brand or head office.

Separate (temporary) shocks from (permanent) shifts. Price spikes tend to mean-revert, changes in rules do not. Budget for the rules and ride out the prices.

Buy into diversification, not autarky. Having a second source of supply is usually cheaper than building a second plant, and faster to achieve.

Watch New Delhi as closely as Washington. To an extent, businesses based in India can do something about local quality control orders and duties, particularly when they have some standing with the government.