Navigating the Economic Fallout of Increased Tariffs on Indian Exports
Explore the implications of President Trump's executive order imposing a 25% tariff on Indian exports amid geopolitical tensions and its potential effects on both the Indian and American economies.
 |
| U.S. President, when questioned by the media about significant U.S. imports of Russian uranium and chemical fertilisers, responded with a dismissive, "I don't know anything about it. I have to check..." |
August 6, 2025. The US president, Donald Trump, enacted an executive order that implements a 25% tariff on Indian exports to the US, attributing this decision to India's continued purchases of Russian oil.
Interestingly, Trump has not added any extra tariffs on China, which is the largest buyer of Russia's crude oil. Sectors that will be affected by these tariffs include textiles and apparel, precious stones and jewellery, shrimp, leather goods, animal products, chemicals, and both electrical and mechanical machinery.
Items that are exempt from these increased tariffs consist of pharmaceutical products, energy resources like crude oil, refined fuels, natural gas, coal, and electricity, essential minerals, as well as various electronic parts such as computers, tablets, smartphones, solid-state drives, flat panel displays, and integrated circuits.
The trade figures for 2024-25 show that bilateral trade between India and the US amounted to $131.8 billion, comprising $86.5 billion in exports and $5.3 billion in imports."
This could be perceived as a strategy by a deep state within the US to undermine India and instigate internal conflicts.
It will affect India's economy for some time, which is what the US desires. However, raising tariffs will also hurt the Americans. They would be losing access to a market of 1.4 billion people in India. American firms are searching for new markets, and India is undoubtedly one of them. India could implement 50% tariffs on all non-agricultural and dairy items, including Tesla. Chinese electric vehicles are on par with Tesla and have already made inroads into the European market.
There are numerous loopholes in the additional 25% tariff on purchasing Russian oil. India could acquire the same through China, paying a premium of 1-5%, and reduce the US tariffs to 25%. India may negotiate with China and collaborate to strengthen both economies.
This time, tariffs are more about politics than anything else. India is establishing stronger trade relations with African and South American nations, conducting transactions without involving the US dollar.
The Indian government is exploring all possible alternatives to protect the economy. India will increase tariffs on American vehicles, including Ford, because they're less valuable in the US compared to Japanese or German cars.
India responded assertively to America's action, describing it as highly regrettable. India has already made its position clear on these issues, stressing that oil procurement choices are influenced by market dynamics and are vital for meeting the energy requirements of India's 1.4 billion people.
India may halt all business transactions, including the trade of 100% generic drugs, with the US. There is no need for concern as this is just a repeated strategy of inflating figures, which may later be adjusted or not at all. India should consider pausing trade of its goods or, better yet, refrain from dealings with the US for a time.
Why is Trump focusing on India instead of other countries? India has already started seeking alternative markets. It will lower prices to the most affordable level, enhancing domestic consumption among over 1.45 billion Indians. Additionally, it will support businesses that face challenges for a while.
India may confront the US directly now or later. It's better to address it now and make progress than to wait. Once it encounters such a bully, it will act appropriately in the future. There is no benefit in being nice anymore; the time has arrived for de-dollarisation. India may initiate BRICS payments and UPI payments. From now on, all transactions should be conducted in local currencies, rejecting the US dollar. India has endured sanctions in the past and will navigate through this situation once again.
Trump's conduct is likely to be detrimental to himself in the long run. Many experts believe he has initiated the decline of the USA and the dollar, as trust and respect for the USA are fading. There will be more efforts in India to achieve self-sufficiency and reduce dependence on the USA. This will be a consequence of his arrogant and illogical emperor-like behaviour. He appears to harbour resentment towards India for not backing his desire for the Nobel Peace Prize.
The process of generating challenges related to the Indian economy is underway. The US and Western nations desire a weak India rather than a powerful India, one that will comply with their directives. Currently, they cannot effectively confront China, while other nations have already surrendered.
It is an undeniable fact that tensions have been brewing between the United States and India, which reflects the inherent challenges within the liberal framework of an open society. Given that both nations epitomise liberal ideals and share a close relationship across various domains, this period of strain is likely to come to an end. The people of India are hopeful that the current administration will manage this situation appropriately and resolve it effectively; if successful, they will be rewarded by the electorate in future. However, if the problem is not handled correctly, the public may reconsider their support for alternative options.
Ultimately, India has recognised the rationale behind collaborating with China while sustaining its relationship with Russia, aiming to render the US and NATO inconsequential to everyone. India stands as a global player and an independent sovereign state. It has endured far more than what Trump can throw at it. Forward progress is the only option; there is no turning back.
Also Read: The US Moves Closer to Hypocrisy
Also Read: US Imposes 25% Tariff on Indian Exports
US-India trade tensions
#USTrade #IndiaEconomy #Tariffs #GlobalTrade #ForeignPolicy #Geopolitics #EconomicRelations
