Welcome to another Friday, chief.

In today’s edition — Trump dusts off his tariff hammer and whacks China with a 145% import duty, prompting Beijing to rush to the WTO; and a gang from Uttar Pradesh ran an Aadhaar card factory, equipped with silicone fingerprints and spoofed websites to create new identities for just ₹5,000 apiece.

Whiplash for the Defiant Dragon

—Vishwas Ved

Last week, we cursorily mentioned that US President Donald Trump was done hitting the world with his tariff hammer and now we could move on with our lives. But Don was anything but done, much to the shock and chagrin of humans and penguins alike.

Hence, we plunge headfirst into the world of trade wars, where Trump swung his hammer thrice this week, hitting the Dragon first with a 104% import duty, then to 125%, and finally settled at 145% last night, after the Asian giant imposed retaliatory tariffs of 34% at first, and then bumped it up to 84%. 

Trump said: 

“Based on the lack of respect that China has shown to the World's Markets, I am hereby raising the Tariff charged to China by the United States of America effective immediately. At some point, hopefully in the near future, China will realize that the days of ripping off the US and other countries is no longer sustainable or acceptable.”

That was not the end of it. To rub salt on the Dragon’s wounds, the US President subsequently announced a 90-day tariff moratorium on all countries, barring China.

So, what’s it with China that has riled up the US this much? We’ll partially answer the question in a moment. Stay on.

Time to Play Victim

The punishing tariffs have shaken a global trading order that existed for decades, raising fears of a deep recession.

China says it will “fight to the end” and its first cute step in that direction is a formal complaint with the World Trade Organization (WTO).

No doubt it’s a high-stakes game of economic chicken where the WTO has been asked to play referee, ironically, by a country known for treating the WTO rulebook like a discardable manual.

China’s proclivity to bend rules was also highlighted this week by India’s Commerce Minister Piyush Goyal who reiterated that China’s success was not because it played the game well, but because it moved the goalposts, as the world watched. 

Goyal went on to use words such as “unfair trade practices” and “hidden subsidies” for the neighbouring country.

To understand the basis of these allegations better and size up the reason China seems to be the primary target of the punitive tariffs imposed by the US, let’s go back a couple of decades.

The Great WTO Heist

The story started in 2001 with China’s entry into the WTO, with the support of the Western nations who wanted Beijing to open up, play fair, modernise the economy, and of course grant access to multinationals. 

Instead, China piggybacked the WTO and effected just enough economic reforms to attract foreign money, and retained strict control over “strategic” sectors.

China craftily opened up its factories, but kept its markets closed. It sneakily embraced global trade, but brazenly shunned transparency. It welcomed foreign capital with a grin, but emasculated foreign competition. 

In its annual report, the US Trade Representative described China as the “biggest challenge to the international trading system”. The report accused Beijing of using state power to manipulate the playing field.

The allegation is that the Dragon doesn’t only artificially manufacture high entry barriers, but also favours domestic firms in contravention to the WTO deal it signed. In short, the state openly plays an active role in deciding who wins between domestic and foreign players.

As a result, American tech giants such as Google and Facebook had to leave China. The country also encourages and facilitates forced tech takeover, and ensures that intellectual property rights are decorative at best. 

In January 2024, even the WTO’s trade policy review echoed the sentiment, noting a glaring lack of transparency in China’s industrial policies. From electric vehicles to steel, the WTO said it couldn’t figure out the extent of China’s government support to domestic companies. 

The world latched on to this scathing review and went after China with hammers and tongs. The US called China’s practices “predatory”, while the EU, Australia, and Britain also chimed in with their own disapproval. 

A belligerent Beijing insisted it was playing by the rules, but at the same time it said it would not hold “generalised” discussions about state involvement. 

Painful days ahead

While the fate of this trade war would become apparent only after some time, the damage it has done to the credibility of the global trade system cannot be denied. Despite the 90-day breather granted by Trump, supply chains will suffer, exporters will sweat bullets, and companies across the world will brace for pain.

As of today, the WTO remains a polite and blindfolded referee while the heavyweights make their own rules in the ring.

So if you hear loud thuds this weekend, it could just be the sound of more tariffs dropping.

The Great Indian Identity Swap

Aadhaar is a proof of identity, but in UP’s Badaun, till about a week ago, it was more like a game of ‘Who Do You Want to be?’ 

For a price, you could get a new name and a new date of birth on a real Aadhaar card, on the basis of some fake biometric credentials and documents.

The UP Police this week busted a gang of youngsters, doubling as identity artists, who could help you reinvent yourself and get a brand-new identity. 

The mastermind, Ashish Kumar, a BTech dropout, built a fake Aadhaar and Passport Seva portals. He took the help of another guy who specialised in fingerprint magic. 

This genius modified scanners to accept silicone-moulded fingerprints. Using these moulds, he turned scanners into identity-vending machines. 

As a result, you could stroll into an Aadhaar centre with a box of gummies and walk out with a new identity. In a matter of minutes, you cease to be Suresh from Surat; you’re now Sunny from Sambhal. All for a modest ₹2,000 to ₹5,000.

They weren’t just amateurs operating in 12 states; these identity ninjas even managed to bypass UIDAI’s geo-fencing. Which means they spoofed locations, making pricey VPNs somewhere blush in admiration. 

Additionally, there was some side hustle as well: the identity artists were also manufacturing ration cards and birth certificates.

Investigations revealed that over 1,500 Aadhaar profiles were tampered with. Thankfully, the police put a stop to it. 

3,24,067

The number of people who filed ITRs for income above ₹1 crore in FY25. Of these, a total of 2.97 lakh individuals filed their tax return for income between ₹1 core and ₹5 crore. Taxpayers who filed their income tax returns between ₹5-10 crore are 16,797 and those who filed their income tax returns for more than ₹10 crore are 10,184.

— End of Pharma Tariff Relief. US President Donald Trump says he will soon announce "major" tariffs on imported pharmaceuticals, a move that could end decades of low-cost global trade in medicines. For years, most countries, including the US, have imposed few or no tariffs on finished drugs, thanks in part to a 1995 WTO agreement aimed at keeping medicines affordable. This shift comes after Trump introduced a blanket 10% tariff on other imports last week, as part of a broader effort to bring manufacturing back to the US.

— Tariff vs inflation. Reserve Bank of India Governor Sanjay Malhotra has said that more than inflation, the central bank is concerned about the impact of US tariffs on growth. During the post-Monetary Policy press conference, Malhotra said the RBI lowered the growth forecast primarily because of the tariff-related uncertainties. "More than inflation, we are concerned about tariff impact on growth," he said.

— New Aadhaar app. The government has launched a new Aadhaar app featuring facial recognition authentication and digital verification capabilities, eliminating the need for physical cards and photocopies. The app, currently in beta testing, allows users to share only necessary data through secure digital means with their explicit consent. Verification through the new app works similarly to UPI payments, where users can authenticate their identity by scanning QR codes at hotels, shops, airports, and other verification points.

— UPI limits raised. The Reserve Bank of India on Wednesday authorised the National Payments Corporation of India to revise transaction limits on the UPI, in consultation with ecosystem stakeholders and banks. The RBI said the revision is intended to align transaction limits with evolving user needs. At present, UPI transactions—covering both person-to-person (P2P) and person-to-merchant (P2M) payments—are capped at ₹1 lakh, except for specific P2M categories, where limits are higher at ₹2 lakh or ₹5 lakh depending on the use case.

ICYMI | India’s ‘Wiz’kid is Missing

Missed last week's update? Discover why Google turned to Israel for its biggest-ever acquisition in the cybersecurity space, and also why Indian companies do not make the cut despite being a hub of tech talent.

Was this email forwarded to you?

The CFO Weekly Digest is a weekly newsletter brought to you in collaboration with The Core.