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India Today
11 hours ago
- Business
- India Today
In numbers: Trump doubles tariffs, targets India over Russian oil trade
US President Trump will double tariffs on India to 50% this month, punishing New Delhi for buying Russian oil, citing its continued imports of Moscow's IT MATTERS This sharp escalation comes on top of a previous 25% tariff set to take effect overnight, effectively doubling the trade penalty. The move follows failed US–Russia talks over the Ukraine war and deepening tensions between Washington and New Delhi. India's energy ties with Moscow — and its role in the Brics bloc — are now at the centre of a growing geopolitical NUMBERS25% — Additional tariff rate imposed by Trump on Indian goods.21 days — Time until the new duties take effect.25% — Existing country-specific tariff already scheduled to start overnight. IN DEPTHThe measure stacks on top of the existing 25% tariffs already set to take effect, doubling the penalty for affected Indian exports. The order frames India's Russian oil trade as part of an "unusual and extraordinary threat" to US national security, putting New Delhi in the crosshairs of Washington's Russia sanctions policy. It also signals to other countries that buying Russian crude could bring similar US trade retaliation. Signed on August 6, the executive order uses emergency powers under US law. It expands earlier measures that banned Russian oil imports and targeted Moscow's hostile actions says India is "directly or indirectly" importing Russian Oil, either buying it outright or through intermediaries. In the White House's view, those purchases help fund Russia's war in Ukraine and prolong the conflict. BIG PICTUREThis is the most aggressive trade move against India since Trump's first term. This move is the sharpest escalation in US–India trade tensions in years. In 2019, Trump stripped India of special tariff-free treatment under the Generalised System of Preferences. Now, the White House is framing India's energy policy as a direct challenge to US foreign policy on Russia. WHAT THEY SAID"They're fuelling the war machine. And if they're going to do that, then I'm not going to be happy." — Donald Trump, US President- Ends
Indian Express
5 days ago
- Business
- Indian Express
Despite Donald Trump's latest salvo, India-US mini deal is by no means dead
Two decades ago, the idea of a trade deal between India and the US seemed pure fantasy. After all, the divide between the two on tariffs, standards and double standards, to be mischievous, seemed irreconcilable. Two decades, however, is a significant period in economic development — and an eternity in politics. Today, change is so rapid that what looked impractical just yesterday appeared to be within the realm of possibility. Or so it seemed. How did we even get here? India's recent shift in trade diplomacy, moving from a cautious approach to actively pursuing free trade agreements, reflects a strategic imperative to diversify trade partnerships and enhance its position in global supply chains. It is also a reflection of the need to explore alternatives to trade liberalisation, albeit guardedly, to the multilateral system, currently in an extended coma. This pivot is therefore driven by self-interest, the desire to expand exports, attract investment and counter potential geopolitical headwinds. For President Donald Trump, trade diplomacy is the equivalent of levying punitive import tariffs on those countries that he believes have free-ridden on the open US market for decades. The script aimed at the MAGA constituency is irresistible: Use tariffs as a negotiating tool to extract concessions from 'errant' trading partners, bump up government revenues, reduce, or better, eliminate trade deficits and bring manufacturing back home to America. The fact that none of this, except strong-arming the EU, Japan, Vietnam, Indonesia, South Korea and perhaps India into concessions, will work does not restrain the President and his advisors for too long and need not detain us either. Trade deficits and limited but key manufacturing are manifestations of structural features of the US economy, but let that be a topic for another day. For now, POTUS has announced a significant hardening of the trade stance against India, declaring a 25 per cent tariff on Indian exports effective August 1. The mini trade deal between India and US that was to be agreed upon after being deferred to August 1 is deferred again, but hopefully not abandoned. The 25 per cent threat, almost the same as the unenforced April 2 'Liberation Day' tariff of 26 per cent, is accompanied by an additional, as-yet-unspecified 'penalty' for India's continued substantial purchases of crude oil and defence equipment from Russia. The official justifications are India's 'far too high' tariffs, its 'most strenuous and obnoxious non-monetary trade barriers', and its strong energy and military ties with Russia. The fact that the President described India as a 'friend' in the same breath softens the blow, leaving the door ajar for further negotiations, but does nothing to alleviate his transactional nature, disregarding the harsh asymmetries in levels of development between India and the US. Thus, restoring the Generalised System of Preferences (GSP) under which India gets non-reciprocal, duty-free treatment for several products to push development, while on the negotiating table, looks improbable even if US per capita income at $90,000 is 30 times that of India. Even if it were on the table, it is unlikely to have been a sticking point. A fallout of that is a dubious but de facto acknowledgement of the blunt narrative that India is the fastest-growing emerging market and soon to be fourth-largest global economy. In private, I think all negotiators will admit it is not a match of equals. In the parlance of golf, a handicap such as the GSP is justified. What, then, could have been the sticking point? Perhaps agriculture and dairy. It is no secret that US lobbies are looking to sell more cheese, milk, maize, soy, corn, and other similar GM products. Throw in nuts and some fruits and you have the makings of a potential disruptor to the vast agriculture, including the dairy sector, in India, that accounts for roughly 45 per cent of employment. For India, this has been a red line due to the overwhelming number of small farmers, not to speak of potentially damaging political consequences. Allowing highly subsidised US farm produce would spell political disaster. Especially, when the government has had to face severe criticism on the unsuccessful doubling of farmer income policy. Besides, the infamous farm laws had to be withdrawn and farmer protests managed. In this background, even a nuanced and limited opening of agriculture that protects small farmer interest, as some have argued, would fall prey to a carefully constructed narrative of the deal being anti-farmer, and therefore, against national interest. For this reason, India has maintained this stance in recent FTAs with Australia and the UK. The US negotiators perhaps already know this only too well. President Trump's latest salvo is no doubt a negotiating strategy, buoyed in part by the success of similar threats to other countries. For example, the US signed a significant agreement in July with the European Union (EU), where the EU agreed to a 15 per cent tariff on most European goods, down from a threatened 30 per cent. Ditto for Vietnam (from 46 per cent to 20 per cent), Indonesia (from 32 per cent to 19 per cent) and Japan (from 25 per cent to 15 per cent). Some of these countries are our competitors for labour-intensive products such as jewellery, textiles, footwear, leather, toys and handicrafts and will have cheaper access into the US market, at least for now. Coercion has been defined as success in the US and countries have caved in to mitigate the risk of even greater economic disruption to their economies. India might be willing to give concessions in areas like data localisation requirements, digital services taxes and even digital trade rules. It should be noted that India abolished the Equalisation Levy, aka the 'Google Tax', in 2024. It was a tax measure on digital transactions by non-resident companies earning revenue from users in India without a physical presence. Agriculture, however, is a different kettle of fish. What a difference a few weeks has made. From being 'very close' to being completed, the India-US mini deal hangs in the balance, although it is by no means dead. Scarlett O'Hara's line from Gone with the Wind — 'tomorrow is another day' — captures the enduring optimism, but in the present, it reflects a capricious and fragile global state in which uncertainty reigns supreme and the exercise of discretion is a crafty manifestation of power. The writer is dean, School of Humanities and Social Sciences, and professor of Economics at Shiv Nadar University. Views are personal
The Hindu
21-05-2025
- Business
- The Hindu
Why is India seeking to impose retaliatory tariffs on U.S.?
The story so far: Retaliating to the U.S. imposing 25% tariffs on imports of steel and aluminium earlier in March, India notified the World Trade Organisation (WTO) last week of its intent to place tariffs on $7.6 billion worth of imports from the country across the Atlantic. New Delhi held that the measure estimated to rack up $1.91 billion in duties would mirror the impact on their exports of steel and aluminium because of Washington's tariffs. The development transpired days before the two countries informed about having expedited progress towards the first tranche of the bilateral trade agreement. The reciprocative measures come into effect thirty days from the date of notification, that is, May 9. What all has happened in the recent past? Into his second term, U.S. President Donald Trump this March reinstated 25% tariffs on all steel and aluminium being imported into the country. This was alongside eliminating all country and product-specific exemptions. He argued the move meant to protect domestic industries being reportedly 'harmed by unfair trade practices and global excess capacity'. The 45th U.S. President endowing paramount focus on pursuing protectionist policies is widely acknowledged and not anything new. Mr. Trump had earlier instituted tariffs on the two commodities back in March 2018 during his first term. Steel was subject to 25% tariffs whilst aluminium 10%. India first moved for retaliatory measures only in June 2019 when Washington removed it from their Generalised System of Preferences (GSP), citing unresolved issues. For perspective, GSPs are unilateral, non-reciprocal and non-discriminatory benefits extended by economically better economies to developing countries. Disapproving of the exclusion as 'unfortunate', India imposed retaliatory tariffs on 28 items of import (from the U.S.) as apples, walnuts and almonds, among others. Later in 2020, albeit unrelated to the prior development, U.S. expanded the scope of the regime to also cover derivatives of the two metals. The trade-related headwinds only sought to ease when Democrat leader Joe Biden assumed the North American country's top administrative office in 2021. The formal steps were carved later during Indian Prime Minister Narendra Modi's visit to the U.S. in September 2023. Reciprocating India's gesture to withdraw the duties imposed in 2019, the U.S. Dept of Commerce committed to ensuring greater market access to Indian steel and aluminium. Things however, reverted to the 2019 order with Mr. Trump's return to the Oval Office this year. This time around, both aluminium and steel find themselves subjected to the same rate, that is, 25%. What all issues have India highlighted? The central point of contention is the nature of the American tariffs. The United States has maintained at the WTO that its measures are not safeguards but intended to pursue a 'national security statute'. It argues that the tariff regime is in accordance with the General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Safeguards (AoS), citing the redeemable exception for pursuing security interests in the covenant. However, as indicated in a WTO communication, the European Union, India, China and the U.K. disagree with the 'characterisation of these measures, asserting that they are safeguards'. Further, India in its notice also stated that the mandatory consultations prior to attaining an acceptance of AoS had not taken place. Thus, it contended about reserving the right to 'suspend concessions or other obligations' that are 'substantially equivalent to the adverse effects of the measure to India's trade'. India has indicated they intend to pursue the same by suspending concessions or other obligations. How have our industries reacted to such developments? The tariff revisions in 2018 had prompted concerns about Indian exports becoming 'costlier and uncompetitive' in the U.S. market. Back then, the trade dynamics pitted India against countries accorded an exemption to the paradigm. The present regime, however, does not accord any exemption. Back then, according to data from the Joint Plant Committee tabled in parliament, finished steel exports to the U.S. declined 48.4% in FY 2019-20 and 46.7% in FY 2020-21. Furthermore, in response to a question on the same subject in February 2020, Commerce Minister Piyush Goyal told the house that the share of the U.S. in India's steel exports came down to 2.5% in 2018-19 from 3.3% in 2017-18. In the now concluded financial year 2024-25, provisional data indicated exports having increased 44.21% until February compared to a decline of 42.3% in FY 2023-24. Though the impact of the latest set of measures is yet to be ascertained, steel manufacturers have sought caution. In an investor call this February, the Steel Authority of India Limited (SAIL) held that the U.S.' protectionist measures have raised concern among producers globally about 'the potential retaliatory measures and (its) impact on the global trade pattern'. 'The imposition of tariffs by the U.S. has also led to increased volatility in the global market. While U.S. steel market stock has surged in anticipation of gaining a competitive advantage, global producers are experiencing decline,' it observed. Poignant to note, however, is thatthe protectionist policy of 2018 ironically did not cause much enthusiasm in Washington as well. An analysis by the U.S.' Federal Reserve Board in December 2019 concluded the regime to have given a 'small boost' to employment in the realm of manufacturing which was although offset by 'larger drags' of rising input costs and retaliatory tariffs. Additionally, it attributed the increase in prices (for producers) to rising input costs. What broader implications are we looking at? Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), held that India's latest WTO action could potentially cast a shadow over negotiations. He added that notwithstanding the same India's 'calibrated, rules-based approach' contrasts with the U.S.' 'unilateralism', thus, positioning India as a 'staunch defender of multilateral trade norms'. He further added that the move also indicated New Delhi's tougher stance, especially in 'politically sensitive sectors' as steel and aluminium, that aligned with its Make in India industrial strategy. Naveen Pant, Head of the Secretariat at the Aluminium Secondary Manufacturers Association (ASMA), told The Hindu that the step was necessary to protect the interests of the domestic industries. He further stated that being at par on the negotiation table would also help soften the impact of tariffs on steel and aluminium. 'Earlier, they also had some arrangement through Mutually Agreed Solution (MAS) through which they got their agricultural products exempted in return for the exclusion of duty on steel and aluminium,' he explained. What happens next, though, according to Mr. Srivastava, would depend on Washington's response. He observes that, should the U.S. engage in consultations or withdraw the contested measures, a solution could be attained. Failing which, India's proposed reciprocal tariffs take effect in early June. 'Either way, India's move reflects a broader shift: a willingness to assert itself within global trade rules to protect its economic interests,' he argues.
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Business Standard
15-05-2025
- Business
- Business Standard
Trump says India offered a trade deal with 'zero tariffs' on US goods
US President Donald Trump on Thursday said that India has proposed zero tariffs on American goods as part of efforts to strike a new trade agreement with Washington. Speaking at a business gathering in Qatar, Trump claimed that India was 'willing to literally charge us no tariff' on US exports, though he did not elaborate on the terms or sectors covered by the reported offer.'' Trump has floated this idea before, however, the Government of India has not made any comments on the US President's remarks. 'They've offered us a deal where basically they're willing to literally charge us no tariff... They're the highest, and now they're saying no tariff,' Trump said while commenting on Apple's investment in India. The tech giant recently announced plans to manufacture all iPhones that will be sold in the US, from India, marking a major manufacturing shift. 'I had a little problem with Tim Cook yesterday,' Trump said. 'I don't want you building in India. You can build in India if you want to take care of India... But we want you to build here.' Trump criticises India's trade barriers The US President has long criticised India for its high import duties, which can range from around 1 per cent for raw materials and mineral fuels to as high as 100 per cent on specific agricultural products, including dairy and meats. Automobiles are another sensitive area, with passenger vehicle imports facing duties of about 70 per cent. Trump had announced a blanket 25 per cent tax on all auto and auto-part imports to the US. Trump has also criticised India's trade barriers during his first presidency. In 2019, his administration had even revoked India's preferential trade status under the Generalised System of Preferences (GSP).
Express Tribune
05-05-2025
- Business
- Express Tribune
PTA with Japan sought to ease tariffs
Pakistan Telecommunication Authority (PTA) withdrew directives on clearing houses which led to spike in calling rates for overseas callers. Pakistan has raised serious concerns over high tariffs imposed by Japan and calls for entering into a bilateral Preferential Trade Agreement (PTA) to ensure fair competition and balanced tariffs. Secretary of Commerce Jawad Paul has advocated for entering into a bilateral Preferential Trade Agreement (PTA) with Japan to ensure fair competition and balanced tariffs. Federal Minister for Commerce Jam Kamal Khan held a key meeting with the Ambassador of Japan on Monday, focusing on strengthening trade relations and addressing long-standing tariff issues. During the meeting, the minister proposed holding a dedicated Pakistan-Japan Business Forum to enhance bilateral commercial ties. Secretary of Commerce pointed out that Pakistan faces higher tariff barriers compared to other countries in the region, limiting its competitiveness in the Japanese market. Under Japan's Generalised System of Preferences (GSP), Pakistan's textile exports face an average tariff of 5.36%, while leather products are subject to an average tariff of 16% under Tariff Rate Quotas (TRQs). In FY 2023-24, bilateral trade stood at $1.33 billion, with Pakistan exporting only $194 million worth of goods to Japan, compared to $1.137 billion in imports. Minister Khan emphasised the urgent need to boost Pakistan's exports to Japan, which have remained stagnant and are significantly lower than imports. The Ambassador of Japan welcomed the proposal for a business forum and acknowledged Pakistan's concerns regarding high tariffs, assuring that these issues will be addressed. He reaffirmed Japan's commitment to enhancing bilateral trade and investment. The federal minister also stressed the importance of easing business travel through multiple-entry visas and encouraged Japanese investors to explore opportunities in Pakistan's textile, leather, surgical, and seafood sectors.
