In a major boon to U.S.-India trade relations, President Donald Trump delivered some thrilling news. He announced that India has agreed to eliminate its tariffs entirely! This statement comes amidst ongoing tensions, as Trump labeled the current trade stalemate with India as “a totally one-sided disaster.” These discussions play out in the context of India’s complicated, but historically strong ties to Russia. This added complexity is due to the role that Russia plays in financing the ongoing war in Ukraine.
The situation recently came to a head when the U.S. slapped a 50% tariff on several types of items exported from India. This tariff is, in effect, a 25% punishment directed at India’s continued purchases of Russian oil. These purchases are necessary to keep the lights on across a populous nation like India. In fact, just a few months ago, Trump railed against India’s unwillingness to reduce oil imports from Russia. As a result, he noted, this decision has significantly increased the trade deficit.
During the Shanghai Cooperation Organisation (SCO) summit in Tianjin, Indian Prime Minister Narendra Modi engaged in discussions with both Russian President Vladimir Putin and Chinese President Xi Jinping. Modi called his conversation with Putin “insightful.” He highlighted India’s deep diplomatic relations with Russia, as well as the country’s acute reliance on Russian oil and military goods.
Over the years, the U.S. has consistently been one of India’s top trading partners. India already exports hundreds of billions in goods to the U.S. However, the recent imposition of tariffs has raised concerns about potential setbacks for India’s export growth and overall economic performance.
Amidst these challenges, India’s Commerce Minister Piyush Goyal reaffirmed the country’s stance on trade negotiations, stating that India “will neither bow down nor ever appear weak” in its economic relationships with other countries. This statement highlights India’s resolve to stay at the forefront of global trade even in the face of external coercion.
The President has long railed against India’s trade policy, recently arguing that India should have started lowering its tariffs “many, many years ago.” His statements echo increasing frustration by U.S. government officials that the U.S.-China trade relationship is fundamentally unbalanced.