Trump’s Tariff Troubles: 25% Tax Plus Penalty, Then A Oil Deal With Pakistan – Is There Room For Talks?

In the months after taking over as the President of the United States, Donald Trump has kept almost everyone on their toes, threatening them with high reciprocal tariffs. Now, keeping up with the August 1 deadline, he has announced the rate for India along with some additional penalties.

On the one hand, US President Donald Trump calls India a “friend”, and on the other, he imposed a 25% tariff on the export of Indian good to the US, along with a penalty of an unspecified amount, for buying military equipment and oil from Russia. He claimed that the US has a “massive trade deficit with India.”

“Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country. INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE,” he posted on Truth Social.

Is Russia the only reason behind Trump’s 25% tariff on India?

While he maintained India’s exports from Russia as a reason, Trump also linked the tariff decision to our participation in the BRICS grouping—which includes Brazil, Russia, India, China, and South Africa. He labeled the bloc “anti-United States” and accused it of trying to weaken the US dollar.

“They have Brics, which is basically a group of countries that are anti-United States, and India is a member of that, if you can believe it,” Trump said, adding that it is an attack on the dollar, and we’re not going to let anybody attack the dollar.”

This is in addition to US President Trump’s concerns about India’s continued energy and defense dealings with Russia, which according to him, are troubling as they are taking place at a time when the US and its allies are pushing to isolate Moscow over the war in Ukraine.

Trump’s massive oil deal: What this US-Pakistan partnership signals?

After imposing a 25% tariff on India, Trump announcing a “massive” oil deal with Pakistan, with which India has had rough relations. Moreover, since the recent India-Pak deadly conflict, Trump has shown some inclination towards Islamabad, which cast a shadow over trade talks.

This US-Pakistan partnership is aimed at developing the latter’s substantial oil reserves. With this, Trump added adding that his administration has not yet selected the company that will lead the project but added that maybe, Pakistan will be selling oil to India some day.

Pakistan PM Shehbaz Sharif has thanked the US President for his “leadership” in the “historic US-Pakistan trade agreement.” “This landmark deal will enhance our growing cooperation so as to expand the frontiers of our enduring partnership in days to come,” he said.

Is this a shift in India-US ties and friendship?

While announcing a 25% tariff on Indian goods, Trump called it a “friend” and recalled his good terms with Prime Minister Narendra. “Modi is a friend of mine. But they don’t do very much business with us. They sell a lot to us, but we don’t buy from them because the tariff is so high,” he stated.

Notably, the 25% tariff setback comes at a time when the India-US deal has been in the talks with the first phase being concluded by PM Modi and Trump.

What has been India’s response to US tariffs?

The Centre took note of the tariff announcement by the US President, saying it will take all steps to “secure our national interest”. The Commerce Ministry stated that India remains committed to negotiating a fair bilateral trade agreement with the United States.

“The Government has taken note of a statement by the US President on bilateral trade.  The Government is studying its implications. 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. We remain committed to that objective,” the ministry added.