India Tariffs

Today is the first full day after the 50% tariffs imposed by the US on India took effect.

India exports quite a huge amount of goods to the US, inter alia, textiles, gems and jewellery, electronics and pharmaceuticals. They are sure to take a massive economic hit and it is only a question of a very short time before that impact will be felt on the local economy. India was touting its Make in India programme over the last 6 years and that is now in tatters. Who would want to manufacture in India if it subject to such high tariffs?

Over the last 5 years, India was capitalising on the fact that manufacturers wanted to shift out of China. India seemed a safe bet as everyone assumed the US would not touch India as it needed it as a counter balance against China. Modi assumed India could do anything and there would be no consequences, including buying cheap oil from Russia with impunity.

Well the time has now come for India to face the music. It can either stop buying cheap Russian oil, pressure Russia to stop the war or look for alternative sources for its goods.

However none of these options seem viable in the short term. The pain is going to be real.