Shift eminent in current crisis over India-US trade tariff

New Delhi: RSS chief Mohan Bhagwat’s statement on Friday that tariffs on Indian goods have been imposed out of fear of a stronger India was not in isolation.

SBI Capital Markets, in its report “Tariffs are Made in the USA, but Resilience is Made in India,” described the aggressive US tariff regime as a “key flashpoint” designed to pressure India’s external sector.

The report had viewed the approach as targeted at curbing India’s broader economic momentum.

However, recent developments suggest the weather may turn favourable, and talks can be expected to resume “very soon”, according to people in the know.

But critics continued to question the US imposing heavy tariffs on India.

Earlier this week, China’s Ambassador to India, Xu Feihong, criticised the United States for “using tariffs as a weapon to demand exorbitant prices,” calling the 50 per cent levy on India “unfair, unreasonable”.

Trump’s decision to hold off on fresh Russia sanctions or deeper China tariff hikes — while targeting India’s energy imports — has attracted debate within the US too.

It turned louder when Washington abruptly called off its negotiating team’s visit to New Delhi for the sixth round of bilateral trade talks last month. An extra levy was, however, imposed on Indian goods, alleging oil imports from Russia.

“These (the US tariff regime) developments are expected to reshape supply chains, particularly in sectors where India holds strategic relevance. In this evolving landscape, Section 232 tariffs have had a notable impact on sectors like the copper, steel, aluminium, and automobile industries, influencing pricing and competitiveness. India now faces increased sensitivity to external trade headwinds, prompting a reassessment of trade strategy and sectoral resilience,” observed KPMG, widely recognized as one of the “Big Four” accounting firms, this month.

However, Washington’s trade talks continued with Beijing — again, held responsible for Russian imports — with the imposition of new tariffs being postponed twice, which now continues till November 10.

Anantha Nageswaran, India’s Chief Economic Adviser, warned that the Trump administration’s layered 25 per cent + 25 per cent tariffs on Indian exports are explicitly “punitive” and could shave off as much as 0.5–0.6 percentage points from India’s GDP growth — effectively aimed at stalling India’s growth trajectory.

All this while, the US President has refrained from imposing new measures on Russia beyond existing oil-buyer penalties.

He has argued that he’s “ready” to act but is coordinating closely with European allies and pursuing peace-talks momentum, thus delaying any swift escalation against Moscow.

But now, the times may be changing.

President Trump himself appears to have softened his stand. His nominee for the next ambassador to India, Sergio Gor’s statement that the US President shares an “incredible relationship” with PM Modi, reflects a new turn.

Gor emphasised that President Trump has consistently gone out of his way to praise him, even while criticising India on trade issues.

Washington’s action stemmed from a mix of strategic diplomacy, trade-negotiation leverage, and a clear policy signal aimed at throwing the Russia-India-China axis in disarray, and keeping everyone guessing.

Diplomatic developments around this axis and subsequent developments within the US, including contradicting reports on its economy, are being cited as a possible reason for the weather change.

A federal trade court ruled in May that the President exceeded his authority when he issued the tariffs under the International Emergency Economic Powers Act. The United States Court of Appeals for the Federal Circuit upheld that decision late last month.

The Supreme Court will now hear arguments over US tariffs. The outcome could impact many businesses in the US and exporters in other countries, including India.

IANS