Shock, dismay and angst swept across India as businesses, policymakers and citizens digested US President Donald Trump’s sharp remarks and a surprise 25 percent tariff rate earlier this week.
While the Indian government officials weighed a response and business groups tallied the cost of the trade barrier, the local social media flared up with users protesting Trump’s comment and criticising Indian Prime Minister Narendra Modi for not speaking up.
It started with Trump saying the India’s trade barriers were the “most strenuous and obnoxious,” in a Truth Social post July 30. He added that the US may also impose penalty for New Delhi’s purchase of Russian weapons and energy.
Less than a day later, he ripped into India again for aligning with Russia, calling them “dead economies” in another post.
With no imminent trade deal the 25 percent tariffs kicked in as of Friday. India is hardly alone in facing Trump’s trade wrath – and not the subject to the very highest trade rates – but the news left business and political leaders wondering how to cope with the fallout, said Bloomberg.
Complicating the narrative around the India trade deal – or the lack of it – was the US pact with Pakistan that came through the same day.
As the US released rates across the world, India’s relative disadvantage to competitor exploring countries became more apparent, dampening moods and stoking tempers further.
“The biggest blow is that Pakistan and Bangladesh got a better rate than us,” said one Indian manufacturer, adding that “we were expecting something in the 15-20 percent range.”
India’s annoyance can be traced back in part to Trump declaring himself the peacemaker that helped broker a ceasefire in the armed conflict between India and Pakistan in May. The move was seen as an effort to upstage Modi and put the two South Asian neighbours on an equal footing, despite India’s larger military and economy.
According to one of the Indian exporters, “The next six months are going to be difficult for everyone. If the pain continues for months and months, he said he’ll have to start cutting his workforce.
The US is India’s largest trading partner with the two-way trade between them at an estimated $192.2 billion in 2024.
Compared to India’s 25 percent, Bangladesh was subjected to a 20 percent tariff, Vietnam got a 20 percent levy and Indonesia and Pakistan each received 19 percent duties.
Trump’s actions mark a 180-degree turn for New Delhi hopes of preferential treatment over regional peers. It was among the first to engage Washington in trade talks in February, confident of hammering out a deal sooner than others.
India is now weighing options to placate the White House, including boosting US imports, and many hope the bilateral relationship and the tariff rate can still be improved.
