Trump Imposed High Import Tariffs on Canada and Mexico but Revoked Them Within 48 Hours. Why?

Source: Indian Express - Tariff Threat, Date: March 13, 2025

Recently, U.S. President Donald Trump imposed high import tariffs on Canada and Mexico but revoked them within 48 hours.

Key Reasons:

• The U.S. Economy Depends on Imports:
  • The U.S. consumes more than it produces domestically, leading to a trade deficit.
  • The trade deficit exists because the U.S. imports more than it exports.

Why Does This Happen?

• High labor costs in the U.S. make domestic production of certain goods inefficient.
• Countries with cheaper labor (such as China, Mexico, and Vietnam) have a comparative advantage.
• The U.S. dollar, as a global reserve currency, enables high import consumption.

Why Tariffs Won't Solve the Issue?

Tariffs do not resolve this problem because the U.S. will always need to import more goods to meet domestic demand.

USMCA and the Trade Conflict

Trump signed the USMCA (United States-Mexico-Canada Agreement) during his first term, regulating trade between the three countries.

• Signed in November 2018, during Trump’s first term, USMCA replaced NAFTA (North American Free Trade Agreement).
• Imposing tariffs on Canada and Mexico violates this free trade agreement, raising concerns about U.S. trade commitments.

Misconception About Who Pays Tariffs

• Trump’s Claim: Foreign countries pay the tariff. → Incorrect
• Reality:
  • U.S. importers (American companies) pay tariffs when goods arrive.
  • The increased costs are passed on to consumers through higher prices.

Why Did Tariffs Decline After WWII?

• Because they ultimately increase consumer costs without significantly boosting domestic employment.

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Citizenship by Investment Program in Vanuatu

Source: Indian Express - Golden Passport Scheme, Date: March 13, 2025

Former IPL chief Lalit Modi surrendered his Indian passport at the Indian High Commission in London and acquired Vanuatu citizenship. However, his citizenship was revoked after opposition from the Indian government.

Citizenship by Investment (CBI) Program

• Vanuatu is an archipelago of 83 islands spread over 1,300 kilometers in the Southwestern Pacific Ocean.
• CBI allows individuals to obtain citizenship by making a significant financial contribution to a country’s economy.
• This program is popular among wealthy individuals seeking global mobility, tax benefits, and offshore financial services.

Fastest and Simplest CBI Program

According to the Global Residence Index, Vanuatu offers one of the fastest and simplest CBI programs.

• Cost: The price for citizenship ranges between $135,500 and $155,500 (approximately ₹1.18 crore to ₹1.35 crore).
• In 2019, BBC reported that passport sales accounted for nearly 30% of Vanuatu’s revenue.
• Countries like Malta, Turkey, Montenegro, Antigua & Barbuda, Dominica, and Egypt also offer similar programs.

Benefits of Vanuatu Citizenship

✅ Visa-Free Travel: By 2025, a Vanuatu passport grants visa-free access to 113 countries.

✅ Tax Haven: Vanuatu is considered a zero-tax jurisdiction, meaning it does not impose personal income tax, capital gains tax, inheritance tax, or property tax.

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India-U.S. Extradition Treaty

Source: Indian Express - Extradition Treaty Date: March 13, 2025

The United States Supreme Court has rejected Tahawwur Hussain Rana's petition against his extradition to India.

• Signed in 1997 to facilitate extradition between India and the United States.
• An offense is extraditable if it is punishable by more than one year of imprisonment in both countries (Dual Criminality Principle).
• Political offenses are not extraditable, including crimes against individuals protected at the national level.
• However, some crimes are not considered political offenses, such as:
  • Assassination of a Head of State
  • Kidnapping
  • Terrorism
  • International crimes
• Extradition can be denied if:
  • The individual faces persecution based on race, religion, nationality, or political beliefs.
  • The crime is of a military nature.
  • The death penalty is applicable unless the requesting country guarantees it will not be enforced.

Challenges in India-U.S. Extradition Cases

1. Lengthy Process

• Extradition cases take years due to legal challenges.
• India is awaiting the extradition of 65 fugitives from the U.S.
• Between 2002 and 2018, only 11 extraditions were successfully completed.

2. U.S. Reluctance in High-Profile Cases

Several key Indian extradition requests have been denied by the U.S., including:

• David Headley – Mastermind of the 26/11 Mumbai attacks.
• Warren Anderson – Former Union Carbide CEO, responsible for the Bhopal Gas Tragedy.

3. Differences in Legal Systems

• Certain Indian legal charges do not meet U.S. extradition standards, creating barriers.

Extradition Treaties vs. Extradition Arrangements

Extradition Treaty

A formal legal agreement between two countries for extradition.

• India has signed extradition treaties with 48 countries, including:
  • United States, United Kingdom, Canada, France, Germany, UAE, Russia, Australia.

Extradition Arrangement

A mutual understanding for extradition without a formal treaty (Currently with 12 countries).

• Key countries:
  • Hong Kong, Saudi Arabia, Papua New Guinea, Fiji, Italy, Switzerland, Sweden.

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