THE nation is racing to contain the economic fallout from President Donald Trump’s threatened tariffs, which has left officials in New Delhi feeling shocked, jilted and unsure of how to respond.
Trump’s harsh language – calling India’s economy “dead”, its tariff barriers “obnoxious” and its people indifferent to the plight of Ukrainians – has been akin to a verbal slap in the face, according to an official in New Delhi, who asked not to be identified as the discussions are private.
Officials have no template to deal with these kinds of public assaults, the person said, adding that the latest turn of events has put a strain on India’s relationship with the US.
Trump on Tuesday said he would increase the 25% tariff on Indian exports to the US “substantially over the next 24 hours”, citing the Asian nation’s high barriers to trade and its purchases of Russian oil.
India was “fueling the war machine, and if they’re going to do that, I’m not going to be happy,” Trump told CNBC.
India’s government is now bracing for higher tariffs and seeking to limit the possible economic damage.
Prime Minister Narendra Modi has been urging Indians to buy more local goods to offset any slump in global demand, while the Ministry of Commerce and Industry is discussing ways to help exporters who would be hardest hit, such as in the gems and jewellery and textile sectors.
Officials say they will continue to seek back-channel talks to help ease the tensions.
India has been a target of Trump for weeks now because of its economic ties with Russia.
The US president has given Vladimir Putin until Aug 8 to reach a truce with Ukraine and wants to ramp up the pressure by targeting energy purchases from countries like India and China that are helping to keep Russia’s economy afloat.
Modi’s government is so far holding its ground, saying it’s being unreasonably targeted by the US for its ties to Russia – its biggest supplier of oil and military equipment. Officials have signalled they won’t instruct refiners to halt Russian crude purchases.
For months, Indian trade officials had been negotiating with the Trump administration on a deal that both sides said was close to being finalised, with a tariff rate possibly below 20%.
The US president’s tone appeared to change last month when he threatened India with higher duties alongside others in the BRICS bloc of nations for what he said was the group’s anti-US stance. He then followed up several days later with warnings about financial penalties on countries like India for buying oil from Russia. — Bloomberg
