AsianFin -- U.S. President Donald Trump on Wednesday ramped up pressure on India with an unspecified “penalty” on top of hefty tariffs for the Asian economy’s surging trade with Russia, mainly for purchases of sanctioned Russian oil.
Credit：China Central Television
India will be paying a tariff of 25% “plus a penalty for the above”, starting August 1, Trump announced in a social media post. The president didn’t offer any clue of the penalty, but attached India’s trade barriers and heavy reliance on Russian energy and military equipment.
India is one of Russia’s largest buyers of energy, and “they have always bought a vast majority of their military equipment from Russia”, Trump posted on his platform Truth Social. He also claimed India has implemented “far too high” tariffs, “among the highest in the world, and the country has “the most strenuous and obnoxious non-monetary Trade Barriers of any Country.” He stressed in another post that the U.S. has a massive trade deficit with India.
The 50% tariff rate is well above the 10% baseline tariffs that goods from most U.S. trading partners including South Korea have charged since April. It is also higher than the tariff range that Trump earlier this week threatened he would impose if India fails to reach a trade deal with the U.S. When asked by a reporter if India would pay tariffs of 20% to 25%, Trump said on Tuesday, “Yeah, I think so. India has been – they’re my friends.”
The White House didn’t specify the additional penalty that Trump noted in his post. Trump’s top economic aide, National Economic Council Director Kevin Hassett on Wednesday suggested the president felt upset about the stalled trade negotiations between U.S. and India, and he wants the country to open up its market.
“I think President Trump is frustrated with the progress we’ve made with India but feels that a 25% tariff will address and remedy the situation in a way that’s good for the American people,” Hassett said . He speculated the tariffs might the Indian government to reconsider its practices, and Indians “might even open their markets more to us so that we reconsider our future trades.”
India’s Ministry of Commerce and Industry later Wednesday said the government is studying the implications of Trump’s tariff announcement. “India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months,” the ministry said in a statement. “We remain committed to that objective.”
India was one of the first trading partners that start negotiating with the Trump administration. Trump and his cabinet members had repeated they would make a deal with India soon, but the five rounds of talks so far have still failed to remove all the hurdles.
India is bracing itself for higher U.S. tariffs, which will likely be between 20%-25% on some exports, as temporary measure, since it holds off on fresh concessions by August 1 and eyes broader trade deal past the deadline, Reuters cited Indian government officials on Tuesday.
New Delhi reportedly plans to resume broader trade negotiations when a U.S. delegation visits in mid-August, with the goal of finalizing a comprehensive bilateral agreement by September or October.
Trump’s ability to secure commitments on market access for US producers has become a particularly salient fixation after U.S. reached tradeagreements with Japan and the European Union, which have emboldened the president as the August 1 deadline for reciprocal tariffs looms, CNN cited trade officials on Wednesday.
One of the officials said such fixation has created a significant obstacle to the prospects of a deal with India. “They’re willing to go part of the way,” the official said. “But the president isn’t in a ‘part of the way’ mood – he wants barriers removed completely or as close to completely as possible.”
