Indian exports to the United States are set to bear the brunt of a sharp, unprecedented 50 per cent hike in tariffs imposed on them by the Trump Administration from Wednesday, in what it terms is a punitive step against India’s fuel imports from Russia despite Western sanctions. This sharp hike in tariffs is bound to hugely and adversely impact India’s exports in particular and the national economy in a wider sense. Notably, the EU and the United States are India’s largest export destinations, while China and EU are from where India’s imports mainly come from. The two-way trade between the US and India is of the order of nearly $200 billion. Export sources say the tariff hike could hit more than 50 per cent of India’s merchandise exports to the US, worth nearly $90 billion. They fear that exports to the US from here could come down by up to 30 per cent from September, as “US customers have already stopped new orders” in view of the impending tariff hike.
Donald Trump’s recklessness is condemnable also as he has singled out India for the sharpest cut while he softened his cuts vis-à-vis imports to the US from other countries that are buying oil from Russia. Even China has been given certain concessions. Contrary to claims here, Trump has never been a friend of India, or of any other country. The man is guided by his instincts as a businessman even while in the presidential chair. The US is bound to benefit hugely from the tariff hikes he has imposed – and the rest of the world can simply grin and bear with it. The central government hopes to partly offset this fall in exports by attempting to boost the nation’s exports to 50 other countries. This might help only to an extent. Nothing goes to show India can wish away the US tariff hike.
Clearly, the gains India made by circumventing the sanctions on Russia and buying fuel from it at cheaper rates was substantial. With trade in the rupee, it was advantageous for India since the start of the sanctions consequent on the Russia-Ukraine war from February, 2022. The Joe Biden administration remained somewhat mute to this fuel deal between Russia and India – which according to one source rose from 1 per cent of India’s total fuel imports to as high as 42 per cent.
Donald Trump who succeeded Biden, is now in a mood to act – and act harshly against India and others in the line. Curiously, India’s heightened oil deal with Russia by quietly sidestepping the sanctions had won fulsome praise for Prime Minister Narendra Modi. Today, Trump wants India to rue its “smartness.” In the process, India’s carefully cultivated diplomatic relations for the last over 30 years since the time of Manmohan Singh have been seriously ruptured. India’s trade talks through repeated rounds in recent weeks remain inconclusive. At this point, the odds however seem to be weighed against India. A consequent rise in fuel prices is likely.
