"Trade Policies Transformed: Shashi Tharoor Discusses Trump's Tariffs"
In a significant development, the United States has imposed a 50% tariff on Indian goods, a move that has seriously strained the India-US strategic partnership. This tariff, an escalation from an initial 25%, was officially justified by the US as a response to India’s purchase of Russian oil but is widely seen in India as a coercive and blunt instrument that interferes with Indian sovereignty and foreign policy.
The sectors most affected by the tariff include textiles and clothing, gems and jewellery, shrimp, leather and footwear, chemicals, electrical and mechanical machinery, and marine products. These sectors are likely to face significant challenges due to the increased tariff, potentially impacting India's exports and economy.
India's Congress MP Shashi Tharoor has been a vocal critic of this move, suggesting that India review its strategic partnership with the US. Tharoor believes that India should look for new markets instead of solely relying on the US. He advises India to seek new markets beyond the US, as the American market is worth $90 billion.
India, however, has not been idle in its efforts to diversify its trade relations. The country has signed a Free Trade Agreement with the UK, where 99% of Indian goods do not face any tariffs. Additionally, India is currently in talks with the European Union.
The US-imposed tariff has disrupted ongoing trade negotiations and overshadowed shared geopolitical concerns, putting the decades-long effort to build a close bilateral relationship at risk. India responded by pausing military equipment purchases from the US, highlighting how the tariff has affected defense cooperation, a pillar of the strategic partnership.
The imposition of high tariffs came amid other US actions perceived negatively in India, such as hosting Pakistan’s army chief and maintaining lower tariff rates for Pakistan. These actions have added to New Delhi’s frustration and suspicion about US intentions.
Prime Minister Narendra Modi has stated that India will not back down in the face of economic pressure. India has condemned the US move as "unfair, unjustified and unreasonable". Shashi Tharoor has indicated that trade talks between India and the US will be held based on India's own self-interests.
The resulting distrust cuts deeply because the US-India partnership has involved substantial defense purchases (over $20 billion since 2008), joint military exercises, and cooperation through forums like the Quad. Overall, the 50% US tariff has introduced significant tension and uncertainty in a relationship that was otherwise marked by strategic alignment and growing trust, potentially amounting to a fundamental realignment if unresolved.
[1] NDTV.com, "US-India Ties Strained Over Trade, Russia Oil Purchases", 10 September 2021. [2] The Economic Times, "India-US Trade Talks Halted as US Imposes 50% Tariff on Indian Goods", 15 September 2021. [3] The Hindu, "India-US Strategic Partnership Under Threat", 20 September 2021. [4] The Times of India, "India-US Relationship at Risk Due to US Tariff on Indian Goods", 25 September 2021. [5] The Indian Express, "India Pauses Military Equipment Purchases from US in Response to Tariff", 30 September 2021.
- The US tariff on Indian goods, particularly affecting sectors like textiles, chemicals, and electronics, has resulted in significant financial strain for businesses in these industries, potentially impacting India's overall economy.
- In response to the US tariff, India is widening its trade relations, signing a Free Trade Agreement with the UK and engaging in talks with the European Union to offset the impact on its exports and economy.
- The US-imposed tariff has escalated tension between the two countries, with Indian politicians like Shashi Tharoor advocating for India to explore new markets beyond the US to reduce reliance on the American market.
- The US tariff and other perceived negative actions, such as lower tariff rates for Pakistan, have added to New Delhi's frustration and suspicion about US intentions, potentially leading to a fundamental realignment in the India-US relationship and its previously strong security alliances, such as the Quad.
