Should India Buy Milk From The US? FutureIQ

4,768 views Wait, is this logic right? • Oct 10, 2025

Slog Reference: Tariff Good Or Bad

Description

Should India open its doors to US milk and corn? Should we lower import duties on foreign cars and whiskey? Behind these questions lies one of the most misunderstood topics in economics - tariffs. In this episode of Future IQ, we dive into the hidden game of trade wars, protectionism, and global power plays.

From the days when India had only Ambassador cars to today’s EV revolution, tariffs have quietly shaped what we buy, how much we pay, and which industries thrive. Are tariffs protecting our local industries like a caring parent shielding a child… or are they trapping us in inefficiency and high prices?

We’ll uncover why rich nations like the US still impose tariffs despite preaching “free markets,” how cheap Chinese imports changed India forever, and whether allowing US milk could really make Indian families healthier or simply destroy our dairy revolution.

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Planet Money Podcast: https://open.spotify.com/show/4FYpq3lSeQMAhqNI81O0Cn

More Videos:
The Invisible Supply & Demand in Our Everyday Lives: https://youtu.be/imweTGK0Myk
Substitute Goods & Complementary Goods: https://youtu.be/rv1MN1qLp0w

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00:00 Trump imposes tariffs; US-India trade tensions
00:59 Is India self-sufficient in milk?
02:12 Why high tariffs? Local vs global competition
03:34 India's car industry: pros and cons of protectionism
05:00 Tariffs: When local industry is weak vs strong
06:51 South Korea case study: limited-time tariff strategy
08:57 US tariffs: Helping or hurting their own industries?
10:24 Summary: When tariffs work and when they don't
11:06 Other reasons for tariffs: geopolitics & foreign currency reserves
12:41 Pharma example: Why not slap tariffs everywhere?
14:01 Arguments against importing US milk to India
15:17 Arguments for importing US milk to India
17:24 Conclusion: Tariffs are complex—always ask who benefits

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Tariff Good Or Bad

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Transcript

- Trump is imposing tariffs on India and many other countries left, right, and center. He is bullying us into buying milk and corn from them. Do we want American milk? People have strong emotional reactions to this, right? Some strongly feel yes, some strongly feel no. But the reality is that tariffs are a complex subject and instead of taking emotional decisions, we need to think about it carefully, economically and a whole bunch of other considerations. So that's what today's episode is going to be about on tariffs, understanding the pros and cons of tariffs, when you want tariffs and when you don't want tariffs. Oh, but before we start today, uh there is some good news for you. We are starting a future

0m 43s IQ WhatsApp community. The QR code to uh join this community is up on your screen right now and also the link is in the description. So join us. So you also get to pester Naven with the kind of questions that I pester him with. So join. And speaking of tariffs, uh the way I understand it, India is self-sufficient in milk production. So do we really need to import US milk? It's not a question of do we need to. The question is do we want to? But I'm not going to answer that question right now. First let us understand tariffs with a simpler example, right? As to which people benefit from tariffs and which people suffer using tariffs,

1m 25s right? The one person I know that suffers is the consumer because tariffs usually means that the consumer has to pay a high amount for getting a good quality from abroad. Correct? So you are the kind of person who's buying expensive whiskey and expensive cars all the time and you are very unhappy. I can see that. Okay. Uh the other problem with this is that if external cars and external whiskey is expensive then the local companies have no incentive to produce highquality stuff. Right? We will continue to get local lowquality stuff which is cheap and the highquality stuff will always be more expensive. Right.

2m 06s Correct. But there are reasons why tariffs can be a good thing, right? But how does having high tariffs on say luxury cars help? Well, the thing is that it protects the local industry from competition with much bigger, much more sophisticated Chinese companies for example, right? The local industry, car industry can collapse. Right now, for example, that is happening with Africa. their local industry is just not able to develop and they're fully dependent on China. Okay. And that is going to cause major problems later on. What kind of problems?

2m 45s So for example, once they're fully dependent, China can jack up the prices and they don't have a choice. Right? Or China can suddenly use it as leverage. So if India is dependent on China, they can say well let us take Arunal Chal Pradesh and if you make too much hours there, we will stop allowing you to take cars. Right? Or they might even do things like embed malware hidden in all their cars which will be used by our military and then you can imagine the problems. All kinds of things happen if you are too dependent on uh a foreign company.

3m 20s Yeah. I mean this is East India company all over again but in a very different context in a rather more modern context. So what you're saying is tariffs are good because it will allow India to develop a local car manufacturing industry for example. But this is not always true. Okay. When I was growing up, the local car industry was very underdeveloped, right? But still we had high tariffs. As a result, what happened was that the local car industries had no incentive to innovate. The new market is there for them. You know what are people going to do? They don't have a choice. Buying from buying from outside is just ridiculously expensive. So people had to buy whatever

4m 02s they put out. There were just like three or four kinds of car. Ambassador, Fiat, Premier, that's it. Over. Nothing else. Right. And even Fiat was actually the Italian company that had set up in India and all of that. There were lowquality terrible cars uh would break down all the time. Nobody was happy with their cars. Right? Later on when Maruti started with help from Suzuki and then our economy opened up in that's when the car industry started developing right now we have a local car industry worth protecting what was being protected at that time was not worth protecting.

4m 40s Yeah but going by your example that happened after opening up the market and allowing foreign cars like Suzuki for example to come in. So what is the right thing to do? Do you let local industry develop or do you bring in foreign cars and it depends? Sometimes you want tariffs, sometimes you don't want tariffs, right? Want tariffs. Example, India does not have the ability to make laptops, right? So no matter how much tariff you put on external laptops, a local industry is not going to develop out of nowhere, right? True. So if we have tariffs on laptops, what will happen is that the Indian software industry will suffer. In fact, that used to happen in the 80s when Infosys

5m 22s started. There are all kinds of horror stories, right? UN Morti talks about how he made 50 trips to Delhi in 3 years to import one computer. Okay. For the software industry to thrive, you need to be able to import laptops, right? So tariffs on laptops should be low. Correct. On the other hand, when there is an industry which is within striking distance of being as good as the best in the world or at least close, right? Then you want to protect it from foreign competition, right? So for example, there is a EV manufacturing industry in India. There are possibilities.

6m 00s Something is going on. So it makes sense to protect. That's why India is doing all kinds of things. Exposing it to foreign competition right now. The Chinese EV cars will just kill that industry. Yeah. But that's capitalism, right? I mean, uh, the invisible hand of the market will finally decide the best product for the consumer. Yeah. I mean, you know, if you read textbooks, they'll say, "Oh, let the free market handle it." Right? Do you know what the free market did? What the British East India Company? So, India was under free market for 150 years. Nobody wants that. Right.

6m 32s True. So we do need industrial policy where you have to think about geopolitics and a whole bunch of things uh to decide whether there should be tariffs or not and on what things. Yeah. But you've been arguing from both sides. Naven you're saying tariffs are important and you're saying tariffs should not exist. Yeah. So South Korea is a great example of using tariffs just right. Okay. when its industry was developing, it used tariffs to protect that industry. But it made a big important caveat, right? What it said was that these tariffs are for a limited time and there was internal competition. Okay? It isn't like there is one company and you're protecting it from everybody outside so

7m 15s that company can do whatever it wants. like the telephone company from my childhood. Okay, where there was 12 years waiting to get a phone there is internal competition. Second is there is gradual exposure to international competition. The tariff slowly reduced right and the ones who couldn't keep up with this gradual exposure were allowed to shut down. Right? That's the other problem with India. We don't let industry shut down because oh the workers will lose their jobs. Right? Right? And increase the gradual competition until a point where at least some of your industries are now able to compete with the international players. And at that time you can remove the tariffs.

7m 56s You should remove the tariffs. Right? So when you don't have any industry, no capability of creating something, no tariffs. When you have a fledgling industry, tariffs. And when your industry has developed, then again remove the tariffs. Or if this fledgling industry refuses to develop, then remove the tariff and let it die. Let it die more like kill it. Because you know Argentina is a counter example to this, right? They tried this with the Blackberry. They instituted a policy saying that Blackberry will have to manufacture handsets in Argentina and they have if they want to sell in Argentina. But that was just the wrong time to put tariffs and they could it didn't go well. It was

8m 38s a disaster. Yeah. I I heard a Planet Money episode on it. There's a podcast called Planet Money by NPR, National Public Radio of America and uh they've they've done it beautifully. We'll drop a link. Uh check it out. Uh but then what this brings back now is from the perspective of the US from America. It seems that they are right in imposing tariffs on us to help their local industries grow. No, they are being dumb because they don't have a fledgling industry, right? Their industry is the best in the world at most of the things and the one the few things that they are not the best in the world in like manufacturing is by choice. They were best in the

9m 18s world at manufacturing and they decided that this is boring work, boring hard work which is best left to the Chinese and they moved up to higher paying jobs. Now Trump is trying to reverse that. I mean, does he really want Americans to go back to lowpaying jobs so that he can claim, oh, we have local industry? Not really, right? Yeah. Okay. I mean, does he want it? We don't know what he wants. But see, the other thing that's going to happen is that because of the tariffs, now the US is already in a situation where people are used to the higher salaries of the non-manufacturing industry.

9m 54s He imposes tariffs on say steel. So now the cars become expensive but the industry doesn't really quite develop, right? So it just makes everybody unhappy and everything more expensive and probably cause inflation. So all right. So like you just said earlier uh tariffs no tariffs if you don't have capabilities low tariffs if you want the industry to develop high tariffs if you want the industry to develop and low tariffs if you want to um basically let the market decide for itself. That essentially explains when you don't have the industry when you don't have the capability no tariff import when you have an industry which is capable which is getting there it's not yet world class but you know that just a

10m 40s little bit more it is going to reach world class that's the time to protect it with tariffs correct and then as soon as it reaches world class you remove the tariffs so only in that short period the adolescence of your industry that's when you want to have tariffs right yeah Why were you saying this is complex? Because you basically seem to have solved it in this. No. So there is a whole bunch of other reasons why you want tariffs, right? So for example to prevent getting bullied, right? you sometimes it is just you know you have to endure some self-suffering that you know cause problems for your own peoples just so that you don't give

11m 19s into a bully like Trump right or taking British RA as the example you cause self-suffering by saying swadeshi right but that is to prevent the bully from bullying you that's one reason right okay the second reason to have tariffs is that you want to conserve foreign in exchange, right? When you import things, you have to pay for it using dollars, right? You you can't pay for it using rupees because those guys don't want rupees. Correct? Where do you get dollars from? The only way to get dollars is by exporting things, right? So, if you are not exporting enough, you don't have enough dollars and then your imports are a problem, right? So if the number of

12m 02s dollars you have is low then you'll be in trouble because essentials like oil you can't import or fertilizers you can't import happened to Sri Lanka and then it's a disaster right so then the government will try to conserve dollars by discouraging people from importing non-essential things right so raise the for tariffs on cars and toothpastes and stuff like that right you can go without toothpaste for a So uh not really you shouldn't but I get what he means. Similarly there are reasons other reasons to remove tariffs also right. So for example we have a pharmaceutical industry it makes paracetamol croine right tylenol for the US people out there these this industry imports the raw material needed for making paracetamol

12m 52s from China. Okay. Now if we suddenly decide that we want to impose a 50% tariff on the intermediate needed for paracetamol because we do have industry which is capable of creating that and we want to strengthen it right makes a lot of sense. Here is the reason for not doing that because you do this suddenly we stop importing from China and factories here start making that intermediate that industry is happy. Problem is that those factories earlier they were making dyes and they were making what else?

13m 28s Clothes and books, right? Because similar intermediates. And now because you impose tariffs on pharmaceutical intermediates, suddenly they have started doing something else which means that people can no longer buy their paints and their books. Those have become more expensive because that industry shifted away. Right? So every time you slap a tariff on something, you're developing this industry, but as a result, a different industry has to pay the cost. H So then does that mean we should import milk from the US? Right. So reasons for not allowing milk, US milk into the US, right? One is that US is trying to bully us and we don't want to get bullied. Okay?

14m 18s also allowing that will hurt the Indian dairy industry right third is that we are self-sufficient in milk we don't need it in fact we export it if I remember correctly yeah fourth is that US industry uses various sketchy things like hormones which might be long bad for long-term health nobody really knows right and there are people who say that we should let Indians only drink good Indian milk right and somewhat subjectively there is also like oh we have A1 A2 milk which is superior and those guys they treat cows badly and we shouldn't allow that and they treat they give cows non-witch food and we shouldn't have Indians drinking milk of non-vich cows right look the subjective arguments are way

15m 02s too many and everybody has their own opinion on the subjective argument so I'm not even going to go into there the A12 thing is an entirely different conversation that that does not merit even a mention here but yeah let's think about the reasons for allowing right okay so Twitter user Keshashi pointed out a really good list of reasons so one is that right now lots of Indians cannot afford milk nutrition in India suffers because of that many poorer households they will give milk to the boy of the family but not to the girl because there is not enough milk for everybody right if we us milk industry is much much more efficient at making milk so if we allow

15m 47s it in prices of milk will fall nutrition of the entire country will improve right okay second is that sure A1 A2 probably is a marketing scam maybe it is it is not right by allowing us milk to come in you're not preventing anybody from buying their A1 A2 milk at double the price right you're just giving people more choice which is a good thing the ones who want it can go for A1 A2 the ones who are okay with you know non-veous milk they can have that right?

16m 16s Free hand of the market and all of that is that if you think that US milk is dangerous for health because of the hormones and this and that, sure, slap warnings on that milk like those cigarette warning, cigarette warnings, right? So, draw pictures of horribly disformed people saying that this could happen to you with this milk. Then let people decide whether they want to buy that milk or not, right? the the disfigured pictures on milk boxes, milk packets is a bit much. But okay, I get what you mean.

16m 47s Yeah. And finally, if it hurts the Indian dairy industry, maybe it should hurt, right? Because I mean our industry yeah there has been a white revolution and we have been creating much more milk than before but still we are way way way behind global standards and the industry because of the protections is not doesn't have the incentive to improve. Going back to the parent and kid analogy at some point you have to let the kid grow up and face the world the big bad world on their own.

17m 18s Yeah. So I think what I want to say is that I don't have the answers right but you don't either and the WhatsApp forwards you get are dumb right I want you to understand that tariff is a complex subject people have knee-jerk emotional responses on WhatsApp but a better understanding is helpful there are good reasons there are bad reasons there are times you want tariffs there are times you don't right um understand both the sides right tariffs always will benefit some people in the country and will harm some other people in the country. Every tariff has that right. So you have to look carefully at it's not just you know all the WhatsApp forwards make it sound

18m 01s like only they will focus on one side of this. Always ask yourself what is the other side. If they're clearly showing somebody is being harmed. Check at who is benefiting and vice versa. Right? Follow the money is a very good way to uh analyze a topic when it comes to the matters of industrial policy, economics, geopolitics and all of that. And this is just one way to follow the money. Um, tariffs is a complex subject. Hopefully we uh were able to give you the basics of it. But now you should be able to understand that H1B fees of$100,000 US is a tariff on Indians being imported to the US. So think about who's helped and who is hurt by that.

18m 43s Yeah, that is actually a tariff. Uh and if you have thoughts on that, do comment and let us know what your thoughts are on that. But tariffs is a very complex subject and there is a lot more to talk about this. We are not claiming that this is the episode on tariffs that will end all other episodes or this is the conversation on tariffs that will stop all other conversations. What we're hoping is this starts the conversation at your end. And if this conversation interests you, these kind of conversations interests you, then there is an entire economics 101 uh series that we have on the channel of which one of the episodes we will line up for you

19m 21s right now. Shriant, Naven, Future IQ. Do not forget to subscribe or to join the WhatsApp community that we've just created for future IQ. See you there.