India Tariffs

I woke up this morning to the news that the US will be imposing an additional 25% on imports from India with effect from 25 August. This is to penalize them for continuing to buy Russian oil and supporting the Russian economy thereby enabling Russia to continue its war on Ukraine.

This additional tariff will be on top of the 25% tariffs already announced.

This will be a huge blow to India. They supply, inter alia garments, pharmaceuticals and machinery to the US. Many foreign companies did set up factories in India to pivot from China in recent years and to take advantage of the huge “Manufacture in India” campaign initiated by the government. If the additional tariffs kick in, there is going to be a huge economic impact on India.

India has been complacent and incompetent in their trade talks with the US. Complacent because they assumed that there was a special relationship between Trump and Modi and therefore they will get off with minimal tariffs. Also they believed US needs India as a partner to counter China. Complacent because whilst other countries read the US correctly and carefully, Indian officials were caught with their pants down. I had many Indian friends telling me that the negotiations with the US were done and dusted as of 3 weeks ago with minimal tariffs and only needed Trump’s sign off. How wrong they were.

Well I guess it’s time for India to now wake up and start planning their next steps. Am sure Trump is using the threat of additional tariffs to put pressure on India a d other countries buying oil from Russia, such as China and Turkey to put pressure on Russia to end the war. We shall see.

Perhaps there is magic in the madness after all…