By Nikita Dhawan
Correspondent
President Trump has recently imposed an outstanding 50% tariff on most Indian imports, punishing the country for its continuous trade with Russia for discounted oil, according to The Guardian.
The tariffs took full effect after midnight on Aug. 27 in Washington, and doubled as a result of New Delhi's purchases of Russian oil, with Trump arguing Russian trade is directly funding the war in Ukraine. The Guardian reported that under the new tariffs, India is now one of the highest targeted countries under Trump’s ongoing global trade war.
This policy has hit Indian exporters hard.
Top industries like textiles, gems and jewelry and seafood, which depend on American consumers, are now facing concerns about less demand and are halting production due to “worsening cost competitiveness" in the market. Economist Santanu Sengupta warns that continued 50% tariffs could push Indian GDP growth under 6%, a stark contrast from the projected 6.5% mark.
It’s important to note that some key items like smartphones and certain pharmaceuticals remain tariff-free. However, about 70% of Indian exports to the U.S. are under attack by high tariffs, pushing American buyers to shift their attention toward cheaper alternatives from countries like Vietnam and Thailand, the Guardian states.
The tariffs have prompted serious concerns about the relationship between the United States and India.
In fact, S. Jaishankar, the external affairs minister of India, is calling the new tariffs “unjustified and unreasonable,” calling attention to the fact that Europe and other foreign entities continue to trade with Russia without repercussions.
According to the BBC, last year, the US traded goods worth an estimated $3.5 billion with Russia, further exemplifying India’s confusion with the mixed signals given by the Trump Administration.
The tariffs could also have a drastic effect diplomatically. The Guardian reports how India, which has long had a shaky relationship with the West, has started to shift its diplomatic focus onto Russia and China. This alienation of India from the Western world is further explored as the trade ministry plans to expand exports to other regions, particularly Latin America, Africa and Southeast Asia, according to PBS.
Prime Minister Narendra Modi has already spoken out on his reluctance to submit to pressure from the West, urging Indian consumers to buy domestically. He emphasized the importance of economic self-reliance and made it clear that India will not cave to U.S. demands even if the economic impact worsens, stating “Pressure on us may increase [from the tariffs], but we will bear it,” according to The Guardian.
The Guardian also reports how Trump, on the other hand, has expressed no negative sentiments about India’s isolation, stating, “I don’t care what India does with Russia, they can take their dead economies down together, for all I care.”
Despite the turmoil, the two countries continue to hold talks and work together politically. However, the steady relationship that has been built over for years is now at an all-time low. An anonymous senior trade official states, “It is going to take a long time to reboot, and it probably won’t happen until Trump is out,” reported The Guardian.
