US tariff imposition is terrible, but India has done well to resist: Trade expert

Hindustan Times

21 hours ago

The US imposition of 25% tariff is `terrible' and India has done to stand up to Donald Trump's bullying and calling the US bluff, says a leading US trade expert. US President Donald Trump on Wednesday, July 30, announced the imposition of a 25 per cent tariff on all goods coming from India starting August 1(PTI/File)
``India could have fared a lot worse if it had given in to US pressure to open its agriculture and dairy industries, which is America's principal interest. To that extent, the 25% tariff is along expected lines, Biswajit Dhar, told this reporter, adding that 'India sensibly shielded its agricultural and dairy markets from American access. Had we caved, the harm would have been much worse.'
He said that India must keep its small and marginal farmers in mind and their interests could scarcely be ignored. ``No trade deal can be so one-sided,'' the trade expert said.
Dhar also said that the threat to impose tariffs on India's import of Russian oil ratcheting up the pressure on New Delhi, is unacceptable. ``The US has no business telling India how it should manage its relations with other countries. It is a direct impingement on India's sovereignty," Dhar said.
"What is most objectionable is the manner in which the US President cites what kind of trade relations will have with other countries," he said. "First, you said you played a part in ending the India-Pakistan conflict. Now he is going even further. India cannot be led by Trump," Dhar added.
President Donald Trump announced on Wednesday that the United States would impose a 25% on goods imported from India, alongside an additional "penalty" import tax, citing India's significant trade barriers and continued purchasing of Russian oil and military equipment.
In a social media post, Trump stated that while India "is our friend", its existing tariffs on US goods were "far too high, among the highest in the World". He also criticised India's "most strenuous and obnoxious non-monetary Trade Barriers of any Country".
The US president added that India's procurement of military equipment and oil from Russia had enabled the war in Ukraine. As a result, he intended to charge an additional "penalty" on Indian imports starting this Friday, as part of his administration's revised tariffs on multiple countries.
``What Trump's decision has done is to scuttle, in effect, Indo-US bilateral trade talks, which were proceeding alongside," Dhar said. The US president's comments on social media called into question the prospects of a deal with a key US trading partner just days before his tariff deadline.
This move follows Washington running a US$45.8 billion trade imbalance in goods with New Delhi last year, according to the US Census Bureau.
India said on Wednesday that it was committed to a fair and balanced trade agreement with Washington after Trump's tariff announcement. Top trade officials have been transiting back and forth between Washington and New Delhi for months in pursuit of a final agreement.
"India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective," the Indian government said in a statement.
Asked what New Delhi could do now, including imposing counter tariffs as China had done, Dhar said that India needs to wait and watch. ``The kind of tariffs he has imposed on India and other countries, will come back and bite the US,'' he predicted.
Asked what the short-term impact of this tariff imposition would be, Dhar said while they will be 'painful' and will have a clear bearing on exports from India, US companies which trade in India would also suffer. ``For instance, the US pharmaceutical industry leverages the Indian pharmaceutical sector for cost-effective production, particularly of generic drugs, which significantly benefits the US healthcare system through lower drug prices and increased access. Indian companies, in turn, find a large and lucrative market in the U.S., especially for generic medications. This balance could be disturbed," he said.
US tariffs will also impact its smartphone industry, Dhar predicted.
For the first time India has overtaken China as the No. 1 exporter of smartphones to the US, following Apple's tariff-driven manufacturing pivot to New Delhi. India-made devices accounted for 44% of smartphone imports in the US during the second quarter, up sharply from 13% during the same period last year, according to a new report published Monday by research firm Canalys. The total volume of smartphones made in India jumped 240% year-over-year, Canalys wrote.