India is now facing a 50% import tariff against the majority of their goods (electronics and pharmaceuticals exempted). However, Indian Prime Minister Narendra Modi has vowed not to yield to the pressure. Modi said the world was witnessing a “politics of economic selfishness.”
For approximately a decade many western countries including the U.S. have heaped effusive praise on India as corporations viewed the massive Indian population, the world’s largest democracy, as both workers and consumers. However, after the western sanctions against Russia were delivered, India -a BRICS nation- began pulling back from western alignment and influence.
Western sanctions map against Russia (yellow = agree with USA).
What we are witnessing now is one of the ramifications of the U.S. forcefully putting an “us or them” aspect into the strategic economic relationship, where “them” is Russia. Currently, India is not flinching.
One could make the argument that undeveloped regions in Brazil, Russia, India, China and South Africa (BRICS) contain the majority of the valuable rare earth minerals and magnets the ‘western’ nations need for manufacturing. BRICS has a pressure point to apply leverage, but no global trade currency, if the trade conflict escalates.
INDIA – Steep U.S. tariffs on a range of Indian products took effect Wednesday, threatening a serious blow to India’s overseas trade in its largest export market.
President Donald Trump had initially announced a 25% tariff on Indian goods. But earlier this month he signed an executive order imposing an additional 25% tariff due to India’s purchases of Russian oil, bringing the combined tariffs imposed by the U.S. on its ally to 50%.
The Indian government estimates the tariffs will impact $48.2 billion worth of exports. Officials have warned the new duties could make shipments to the U.S. commercially unviable, triggering job losses and slower economic growth.
India–U.S. trade relations have expanded in recent years but remain vulnerable to disputes over market access and domestic political pressures. India is one of the fastest-growing major global economies and it may face a slowdown as a result.
Estimates by New Delhi-based think tank Global Trade Research Initiative suggest labor-intensive sectors such as textiles, gems and jewelry, leather goods, food and automobiles will be hit hardest.
“The new tariff regime is a strategic shock that threatens to wipe out India’s long-established presence in the U.S., causing unemployment in export-driven hubs and weakening its role in the industrial value chain,” said Ajay Srivastava, the think tank’s founder and a former Indian trade official. (read more)
Keep in mind, India is a very poor albeit populated country with the average person living substantially below the poverty line. That sounds like bad news for India until you realize if they lose export trade to the USA, the majority of Indians will not notice the difference in their life.
Politically President Trump and Prime Minister Narendra Modi always appeared to have a very good relationship. However, on the issue of sanctions against Russia, President Trump is stepping into the middle of the BRICS relationship.
Modi feels strong due to a decade of effusive praise from all countries. Trump feels strong due to current effusive praise from all countries. Two hippos are facing each other.
There are multiple dynamics at play including President Trump’s Indo-Pacific strategy, a counterbalance to the influence of China, which is dependent on India. Prime Minister Modi appears to be calling President Trump’s bluff.
Where do they want India to get their oil from? 1 billion + people need their energy needs met. India is not going to jeopardize a relationship that goes back to the Soviet days.
If these tariffs were just economic, then one could understand the rationale for a better deal, but if you are trying to pressure someone to ALSO change their energy sources, that is a recipe for disaster. I don’t know who’s whispering in Trump’s ear, but this is bound for failure.
Do people remember the “Non-aligned States”, back in the Cold War days? India was one of the big ones. Balancing western and soviet relationships. That’s how normal countries behave. Somethings aren’t so clearly ideological.
very interesting perspective, thank you.
Tariff the service industries
tariff the Indian big tech data centers
tariff remittances
investigate and deport the millions of h1b h14 and other work and student visa scams
investigate the Indian ethnic cartels and organized crime networks in hr and big tech
save the USA city and office
india is the new china
1million % agree. Send them all home and let them fend for themselves.
Who will run your economy.?
If there are to be peacekeepers in Ukraine, India is or was the only country that could plausibly provide them. Ukraine doesn’t trust China and Russia doesn’t trust Europe, in both cases for good reasons. A US effort would provoke a MAGA revolt. That leaves India as the only nation with the capacity and a reputation for neutrality. The latter is gone since we antagonized them with the secondary sanctions.
Making the nonAligned World Kneel to DC Feral Banksters …. Aligns Them Against You.
Then the basic question Has to be Asked …. Why Russia is the World’s “Pariah”???
& Over Ukraine$ money laundry???
IMHO Modi has made a huge miscalculation
IMHO Modi has made a huge miscalculation that will be very hard to walk back.
Americans, such as myself, have always viewed Indians favorably. Using myself as a typical American benchmark I’m starting to question why that is.
Their culture supports a caste system that allows an arrogance we saw via Ramaswamy that looks down on Americans as inferior.
Yet we are not the ones with billions below the poverty line. ALL of our citizens are fed and given basic medical care. Not everyone needs to work 24/7/365 to get a tech job (in the USA) to live a great life. Our country doesn’t have one of the largest populations of actual slaves. We live good lives.
If I were Peter Theil, this arrogance and flip off by Modi to America would make me very concerned about my investment in Vance.
Fine…. Then STOP all Indian work visas to tech companies and large US companies. Give American workers a step up the ladder that WE paid for!!!
Generally Modi is doing good work. He is very forceful against Muslims as any non-Muslim country should be. Unfortunately, he is so pro-Hindu that he allows discrimination against Christians too. I personally do not agree with or like that.
I also have majorly big problems with the current H-1B visa system.
I am obviously not pro-India, but I understand Modi’s positions with Russia vis-à-vis India’s needs and Russian energy.
We may be overthinking this.
Q. Will India not buying Russian oil be sufficient to get Putin to the negotiating table? Is oil revenue from India the decisive contributor to Putin’s ability to wage war?
If the answer is ‘yes’, we are on the right track with punitive tariffs. If the answer is ‘No’, then why bother with just India? We should implement similar punitive tariffs for the EU, China, etc. A complete collapse of exports would be too painful for Russia to endure
Many here have highlighted the H1B program. Especially as it relates to % of Indians. I have friends who have lost their jobs to H1Bs. I am in agreement with most of the comments on this – reduce / eliminate H1B, tax remittances etc.
The problem here is not just one of substitution of labor – much more importantly, it is tech companies creating the shortage they cite as justification.
Friends who were laid off are advising their kids to pursue other careers. If this happening in each family, the ‘shortage’ of skilled US workers will only get worse.
We need to target the demand side urgently. If hiring H1Bs is made prohibitively expensive, US workers may finally get the opportunities they deserve