Look beyond US market

URING THE PAST few weeks, it had become increasingly evident that the bilateral trade agreement (BTA) negotiations between India and the US had reached an impasse.

- BISWAJIT DHAR

Therefore, as Donald Trump's August 1 deadline for concluding trade deals drew close, the Indian government must have anticipated that the US President would impose "reciprocal tariffs". And not unsurprisingly, President Trump imposed 25% tariffs on imports from India. But what India would be more worried about is the threat of "a penalty" for buying "a vast majority of military equipment from Russia", and for being "Russia's largest buyer of energy". This is particularly in light of Trump's strong support for the Sanctioning Russia Act of 2025, a Bill aimed at pressuring Russian President Vladimir Putin to end the ongoing war in Ukraine. This Bill includes a controversial provision to impose a 500% tariff on imports from countries such as India and China that continue purchasing Russian energy products.

The 25% "reciprocal tariffs" have been imposed since the Indian government refused to buckle under Washington's pressure to open its market for grains like corn and wheat as well as soya bean and dairy products. This pressure was the reflection of lobbying by the US agri-business, one of Trump's strongest supporters. Given the strength of these lobbies, particularly their proximity to the US President, the government deserves credit for standing up to the Trump administration's pressures and protecting the country's farmers against the US agri-business. There is no doubt that the costs of yielding to the pressures and sacrificing the farmers' interests would have been far more than the burden that the 25% tariffs would impose.