His successor, Donald Trump, the Republican president, doubled down on India with a more protectionist trade policy. He shared this news on his return flight from a five-day trip to – where else – Scotland. Specifically, he pointed toward tariffs on goods imported from India, promising that his administration will impose a 25% tariff on said goods. This decision follows months of pressure due to India’s excessive tariffs on U.S. goods. His comments are part of a sophisticated strategy that seeks to recalibrate our trade relationships to better serve American interests.
Yet in the middle of that, Trump described how important an ally India is to us, saying “India is our true friend.” In particular, he strongly expressed what a burden the high tariffs are that India places on goods coming from American farmers. He quipped that they were “far too high.” To put it mildly, this sentiment highlights the bilateral trade relationship’s fragility, as the U.S. and India both compete and cooperate amidst an increasingly complicated geopolitical landscape.
Concerns Over Russia and Tariffs
Trump made the point, too, that India’s continued procurement of military equipment and oil from Russia helps to sustain Russia’s war on Ukraine. He pointed out that these kinds of purchases facilitate Russian aggression and make international relations more difficult. This has caused alarm in Washington over India’s refusal to back Western sanctions against Moscow.
To respond to these problems, Trump made his big splash by declaring his intent to raise a 25% tariff on Indian products. In addition, he announced that further penalties are being planned under the newly developed tariff structure that would be aimed at several countries. Upsetting Trump, you haven’t told us what tariff rate we should plan on for a tariff war! “We’re going to see,” he said, shrugging his shoulders to the novel and unpredictable nature of this policy.
Unfinished Trade Agreements
Relying heavily on his trade war, Trump postured as a hawk on tariffs. He did disclose that the contours of a possible trade deal with India are far from settled. This gives them space for further negotiation but underscores the difficulty that lies ahead. Those earlier signals were specific discussions made by U.S. businesspeople and diplomats with Indian Prime Minister Narendra Modi, alluding to a possible Trump/China-style trade dynamic pivot. This means India will likely soon begin buying American oil and natural gas.
India is also home to more than 1.4 billion people. This multiethnic third-largest democracy on earth is an essential great power player on the global stage and a potential counterbalance to China’s growing hegemony. Its continuing ties with Russia make alignment on these issues with the U.S. all the more difficult. Trump is unabashedly currently using tariffs as a negotiation tool. This tenuous state of affairs continues to cast a shadow on the developing bilateral relationship.
