US Imposes Tariffs on India, Raising Trade Tensions

On August 3, 2023, employees were photographed working at a company in Haringhata, India.

On Wednesday, US President Donald Trump stated that the US was still in trade negotiations with India. This followed an earlier announcement that the US would impose a 25 percent tariff on goods imported from India, effective Friday. Reuters reported that this tariff, along with an unspecified penalty, would likely strain relations between the two countries.

The nature of the penalty remained unclear, but Trump indicated it was a response to India's purchases of Russian arms and oil, as well as its "obnoxious non-monetary Trade Barriers." In response to the announcement, the Indian Ministry of Commerce and Industry stated that it was committed to negotiating a fair bilateral trade agreement with the US.

Some Indian media outlets noted that the US had announced comparatively lower tariffs for Vietnam, while higher duties were set for Bangladesh and Thailand. However, some Indian politicians and observers believed the tariffs would harm India's economic interests.

Economist Surjit Bhalla, a former executive director for the IMF, was quoted as saying that the ruling party should negotiate a trade deal beneficial to Indian manufacturers and farmers. Indian Congress leader Jairam Ramesh criticized Prime Minister Narendra Modi, referencing past displays of camaraderie between the two leaders and suggesting that the tariff announcement demonstrated the ineffectiveness of their relationship. Ramesh also suggested that the Prime Minister should emulate Indira Gandhi in standing up to the US President.

Despite imposing the tariff, the US referred to India as a "friend." The Indian Congress party criticized the ruling government, stating that the country was now "bearing the cost of Modi's friendship."

Additionally, the US reached an agreement with Pakistan to collaborate on developing the South Asian nation's oil reserves. The US leader has repeatedly taken credit for the India-Pakistan ceasefire, which he announced on social media after Washington held talks with both sides. India disputes Trump's claims, maintaining that New Delhi and Islamabad must resolve their issues directly, without external involvement.