The road from 50 to 500 may just not be that too long - all it would take is a flourish of his signing pen, and another famed tariff tantrum from the man himself.
On Monday, India braced itself as US President Trump threw in his weight behind a Republican bill in the US Senate that would, if passed, legally clear the way for the US to impose sanctions on all countries that trade with Russia.
The American economic onslaught on Russia is a move Washington (along with its western powers) have been indulging in fits and starts for the last three years ever since the Ukraine war started, but this legislation significantly scales up the slow-bleeding (which was generally deemed to be not working) into a full-on blood-squeeze, and take the world once again to the brink of a trade war.
For India, the matter is of particular concern, considering how even the 50 per cent total tariffs (25 per cent tariff plus 25 per cent punitive) have begun to bite its exports. The reason Trump had given was India’s dalliance with Moscow, buying up cheap Russian oil on a margin over the past couple of years. With great effort, PM Modi and commerce minister Piyush Goyal had continued the strained negotiations even while seemingly cutting back on fresh oil shipments — so much so that Trump had gleefully proclaimed just last month that India was doing what he wanted and that a trade deal could happen any time soon.
Then, this happens.
Of course, after all the flip-flops and number games that the Trump administration has indulged in since April 2, nobody really takes the new threat seriously. It’s the negotiation advantage that everyone is curious about — what does Trump intend to gain by supporting such a maverick bill, and as is more likely, what does he hope to gain by highlighting it? Is it China in his crosshairs, or is it that he hopes to push India into making some concessions in the ongoing bilateral talks, which, by all indications, is on its final, and crucial, stage.
“It is reported that India remained the second-largest buyer of Russian fossil fuels after China,” said Dr. Niranjan Shastri, associate professor (finance) at Narsee Monte Institute of Management Studies, Indore, “President Trump’s support for a new bill that would allow a 500% tariff on countries trading with Russia is aimed at curbing Moscow’s wartime revenue.”
Shashtri added, “Because India’s imports of Russian energy are significant, the proposed tariff acts as an indirect penalty on Indian exporters who already face high reciprocal duties.”
That is exactly the problem. Even after just 25 per cent punitive tariff Trump levied on India’s exports to the US back in August (on top of the 25 per cent tariff) has been debilitating for certain sectors of Indian export. Estimates are that India’s exports to the US have fallen by as much as 37 per cent in the past five months since the tariff tirade started — and that’s a figure from last month. With the tariff affecting orders, it is believed that the Christmas orders, particularly of consumer-facing items like garments, would be badly hit.
What is the solution? Whichever way you look at it, reaching some kind of rapprochement with the trade negotiators seems to be the only way out. “Strengthening our trade relationship with the US will not only help offset the current losses but also create a more resilient export ecosystem capable of weathering global economic shifts,” said Rahul Ahluwalia, founder-director of the Foundation for Economic Development.
As for Trump, it seems he has just about started saving the world in his own unique style of ‘my way’ or the 'highway'. Even while telling reporters Monday morning (India time) that “any country doing business with
Russia will be very heavily sanctioned,” he said he himself suggested that Iran should also be added to the list.
