Donald Trump has a new target today in his tariff war against the world: his “good friend” India.
As the end of his “Liberation Day” tariff grace period looms this Friday, the US President has threatened to impose a 25 per cent tariff on the world’s most populous country unless it finalises a trade deal with the US this week.
“India has been a good friend, but India has charged basically more tariffs than almost any other country,” said Trump.
“Now I'm in charge, and you just can't do that," he added.
Delhi’s steep import taxes were not his only gripe. He also threatened to impose an (unspecified) “penalty” on India for propping up Russia’s war economy: “They have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE’”.
Trump’s crowning of India as the world’s “tariff king” is not illogical. The Southeast Asian nation is indeed a notorious offender when it comes to whacking vast import taxes on other countries.
As Gerald Warner pointed out in Reaction, in 2023, the average US tariff on imports was 3.3 per cent – marginally lower than the UK’s which averaged 3.8 per cent. Meanwhile, the EU’s average tariff on imports was 5 per cent, China’s was 7.5 per cent and India’s was 17 per cent.
India was one of the first countries to open bilateral trade negotiations with Trump this year but, in recent weeks, negotiations have encountered significant obstacles. Agriculture is reportedly a sticking point, with Delhi seeking to retain steep tariffs on many agricultural imports, which include 70-80 per cent duties on US rice.
Both countries have plenty to gain from reduced trade barriers. The US is by a long way the biggest importer of Indian textiles, accounting for around 29 per cent of the total share. It’s also the number one importer of Indian pharmaceutical products and the largest importer of Indian leather.
A 25 per cent tariff on Delhi would also impact Apple’s plan to source more than 60 million iPhones sold each year in the US from India by the end of 2025. As US companies sought to diversify away from China, India accounted for 44 per cent of smartphones imported to the US in the second quarter of this year, up from 13 per cent in the same period in 2024.
Sanjay Kathuria, a visiting senior fellow at the Centre for Social and Economic Progress, argues that the US President’s obsession with tariffs will have done Delhi a favour if it encourages India to abandon its self-defeating protectionist trade policies.
The UK and India finally signed a free trade agreement last week after more than three and a half years of negotiations. But, in general, India’s “tariff king” status has been a major roadblock in its efforts to secure comprehensive deals with key trading partners. “For India, rethinking its approach to trade is not about appeasing Trump—it is about fixing a system that undermines its export potential, weakens its position as a serious China+1 contender, limits its ability to secure comprehensive FTAs, and obstructs its broader economic ambitions,” says Kathuria.
Rather less in Indian PM Narendra Modi’s interest, however, will be responding to Trump’s other demand: to stop gorging on Russian energy - or face “additional punitive measures”.
If Putin does not halt his war in Ukraine within nine days, Trump has warned that the sanctions he will subsequently impose on Russia includes “secondary tariffs” on its energy customers.
India’s imports of Russian oil have risen dramatically over the past few years - from less than 1 per cent of its total crude oil imports before Putin launched his full-scale invasion of Ukraine, to a staggering 40 per cent. Since February 2022, India has brought over 130 billion dollars worth of Russian crude.
The reason being economic opportunism. Delhi has traditionally sourced its oil from the Middle East but, after western nations shunned Moscow as a trading partner, it has been able to purchase Russian oil at a significant discount.
India - the world’s largest importer of arms – also buys 50 per cent of its military equipment from Moscow.
All of which explains why India has conveniently retained its “neutral” stance on the war in Ukraine. It doesn’t want to choose between the US and Russia, both valuable trading partners.
But if Trump carries through with his secondary sanctions threat, Modi’s careful balancing act will become that much harder.
Caitlin Allen
Deputy Editor
ON REACTION TODAY
David Waywell
Democrats are wasting their time by focussing on Jeffrey Epstein
ALSO KNOW
Palestine Action win permission to challenge ban - The High Court has ruled that Palestine Action Group has the right to challenge its UK government ban under terrorism legislation, over conflicts with right to free speech. Under the law, membership or support for the organisation can lead to up to 14 years in jail. The group, launched in July 2020, has carried out nearly 400 actions against firms connected to the Israeli military, including a break-in which led to £7m worth of damage to jets at RAF Prize Norton.
British Jewish leaders call for further Gaza aid - The Board of Deputies of British Jews, the UK’s largest Jewish organisation, has called for a “rapid, uninhibited, and sustained increase in aid through all available channels” in Gaza, with Phil Rosenberg, the board’s president, asserting that “food must not be used as a weapon of war, by any side in this conflict.” This rare implicit criticism of the Israeli government comes a month after the board took disciplinary action against 36 elected representatives who signed an open letter critical of Israel's actions in Gaza.
US offered critical minerals deal and military base by Somaliland - The breakaway region of Somaliland has offered Washington a mineral deal as well as a military base near the Red Sea entrance, in exchange for official diplomatic recognition. Having declared independence from Somalia in 1991, it has yet to receive international recognition. The US State Department recently said it recognised only “one Somalia.”
Tsunami alerts across Pacific after high-magnitude earthquake in Russia - An 8.8 magnitude earthquake, the sixth most powerful recorded since 1900, off Russia’s eastern coast sent tsunami waves into Japan, Hawaii and the US west coast on Wednesday morning. The worst of the threat is thought to have passed. Evacuations were ordered across the Pacific including for 2 million people in Japan where the warning has now been downgraded to advisory. Hawaii’s warning has also been downgraded to the same level. Although some tsunami advisory was cancelled in some areas of coastal California, a warning remains in effect for significant portions. Warnings were issued elsewhere, including in China, the Philippines, Indonesia, New Zealand, Peru, Mexico and Chile.
FIVE THINGS
England and Wales population grows at near-record levels. Delphine Strauss in the Financial Times.
In conversation with Elisabeth Kendall on what the Houthis really want, in Engelsberg Ideas.
What does China want in Ukraine? Beijing’s Ambivalence is limiting its role, writes Da Wei in Foreign Affairs.
Labour need to stop dithering on defence. James Cartlidge in CapX.
William Hague in The Times: Push for peace now or the two-state dream is dead.