Modi ready to ‘pay a heavy price' as India seeks to resist Trump tariffs

The Guardian

4 hours ago

The Indian prime minister, Narendra Modi, has said he is ready to 'pay a very heavy price' for resisting US attempts to dictate the country's trade policies, as India took a defiant position in the wake of Trump's punitive export tariffs.
In an executive order signed on Wednesday, Trump slapped India with an additional 25% tariff, in a move he described as punishment for continuing to purchase large quantities of Russian oil and 'fuelling Russia's war machine'. It came on top of a 25% tariff for Indian exports already announced by the US president.
India's foreign ministry hit back almost instantly, calling the additional tariff 'unfair, unjustified and unreasonable' and accusing the US of double standards, as other countries also importing Russian oil have not faced the same punitive action.
In a speech on Wednesday night which did not directly mention Trump or the new tariffs, Modi appeared defiant as he addressed one of the biggest sticking points in India's ongoing trade negotiations with the US over tariffs.
According to Indian officials, the US has been pushing India to allow for the import of American genetically-modified (GM) crops into the country and for duty-free imports on US farm and dairy products.
However, protecting India's hundreds of millions of farmers – who are a powerful political lobby – is seen as a highly sensitive area for the Modi government. Indian officials said these areas were 'non-negotiable on principle' and were firm that 'we can't import GM'.
That stance was reflected in Modi's speech on Wednesday night. 'India will never compromise on the interests of its farmers, livestock rearers and fisherfolk,' he said. 'And I know that I will personally have to pay a very heavy price for this, but I am ready.'
While trade negotiations continue between Indian and US officials, it was widely acknowledged they had been torpedoed by Trump's announcement of a total 50% tariffs for India, which will come into effect on 27 August unless another deal is agreed in time.
Shashi Tharoor, an MP for the opposition Congress party, said the tariffs seemed to signal 'some other hidden message from Washington' and declared that India should 'also impose a 50% tariff on US goods'.
The Congress party president, Mallikarjun Kharge, slammed the US attempt to use tariffs to coerce India into shifting its trade and foreign policies, which have seen it maintain a relationship with Russia for decades.
'India's national interest is supreme,' said Kharge. 'Any nation that arbitrarily penalises India for our time-tested policy of strategic autonomy … doesn't understand the steel frame India is made of.'
The opposition also directed anger towards the BJP government and the prime minister, with opposition MP Tejashwi Yadav accusing Modi of 'dancing to America's tune'.
Not long ago, Indian media had been celebrating the 'special relationship' between Modi and Trump and its benefits for India, but by Wednesday the mood had shifted and anti-America and anti-Trump sentiment was rife across India's newspapers and TV channels.
'India's sovereignty is non-negotiable and its foreign policy choices cannot be manipulated by other countries, no matter how significant their own ties with India are,' ran an editorial in The Hindu newspaper.
In his Indian Express column, Pratap Bhanu Mehta called Trump 'imperialism on steroids' and said that 'capitulating to this emerging American imperial state, under the euphemisms of reform, realism or capitalist reset, is an affront to both India's dignity and its interests'.
Trump was widely accused of hypocrisy, as China – another major buyer of Russian oil – was not facing the same punishing tariffs and neither was Turkey. There was also deep-rooted scepticism that Trump was making the decision for the benefit of Ukraine and the feeling that the president had ultimately shot himself in the foot by turning on India.
'Before the latest dust-up, India remained one of the few nations on earth where Trump was not deeply disliked,' wrote the author Jonah Blank. 'In sorting through what went wrong, Indians should remember two pieces of advice often given to the lovelorn. First: it's not you, it's him. Second: he's not capable of a relationship with anyone.'
Walter Ladwig, a senior lecturer in international relations at Kings College London, who specialises in south Asia, emphasised that trade had long been a 'testy issue' between New Delhi and Washington, but while 'what's happening now is not unprecedented, it is sharper in tone and more coercive in method'.
'This is the most serious public rift in years, but neither side benefits from a rupture,' he said. 'I expect India to hold firm on buying Russian oil, frame it as a matter of sovereignty and energy security, and quietly look for an off-ramp.'
The US is India's largest export market, where shipments totalled nearly $87bn (£65bn) in 2024. Experts said the economic impact of 50% tariffs on Indian exports to the US was likely to be sizeable, particularly in certain sectors such as textiles, ready-made clothes, auto-components, steel and gems, and would put India at a major disadvantage compared with regional competitors such as Vietnam, Bangladesh and China.
'This is a severe setback. Nearly 55% of our shipments to the US will be affected,' said SC Ralhan, the president of the federation of Indian export organisations.
Prerna Prabhakar, a senior associate at the Centre for Social and Economic Progress, a Delhi thinktank, emphasised that the US was 'definitely a very important export destination for India'. She said that if the 50% tariffs do come into play 'some sectors are going to have a very, very hard time', with smaller textile and apparel firms likely to take a major hit.
However, Prabhakar emphasised that India's own high tariffs meant it still only accounted for 2% of exports globally. Rather than responding to Trump by raising tariffs, Prabhakar said that India's approach should instead be to reduce them, to better integrate itself into global markets and open up other trade opportunities with regions such as the EU, Africa and Latin America.
'If India wants to offset this problem of being at a disadvantage in the US market, it has to work on its own competitiveness issues,' she said. 'Fundamental to that is lowering its own tariffs.'