When the going gets tough on trade, the tough must get going

India's response has been well calibrated in the confidence that our economy can emerge stronger

- Rakesh Mohan Joshi

The US imposed an additional 25% import tariff on India via an executive order on 6 August, accusing India of fuelling Russia's war machine through its energy imports from the country. Though it is yet to go into effect, this is over and above the 25% 'reciprocal' tariff already levied. Earlier most-favoured-nation tariffs remain in place, making most Indian products uncompetitive in the American market. Such reciprocal, differential and secondary tariffs based on criteria other than economic merit—with geopolitical issues thrown into the decision mix—are unprecedented, baffling economists and policymakers the world over.

History is witness to India's unparalleled capacity to emerge victorious from such challenges, proving that 'when the going gets tough, the tough gets going.' For instance, during the global financial crisis, when advanced economies like the US contracted, India posted GDP growth of 6.7% in 2008-09. Though this was lower than the 9.8% expansion in 2007-08, it was far less of a crisis than what other economies experienced.

The World Bank has applauded India for its poverty alleviation programme, which has pulled over 171 million people out of extreme poverty between 2011 and 2023. This has reduced the number of people living in extreme poverty from 16.2% to 2.3% during the period.