Trump’s Tariff Trap

Economic relations between India and the United States have been thrown into disarray after US President Donald Trump announced a sweeping 50 per cent tariff on nearly all Indian imports, with the exception of iPhones and certain pharmaceutical products.

- Kaushik Basu

The move places India among the five most heavily targeted countries under Trump’s tariff regime, alongside Brazil (50 per cent), Syria (41 per cent), Laos (40 per cent), and Myanmar (40 per cent).

The announcement caught Indian policymakers off guard, particularly given Prime Minister Narendra Modi’s open support for Trump’s reelection campaign. The White House’s harsh statement, framing the move as punishment for India’s purchases of Russian oil, has only added to the confusion. As the Wall Street Journal recently noted, this reasoning does not hold up, since China - the largest buyer of Russian oil - has not been penalised for its purchases.

So, what explains Trump’s decision? Paradoxically, India’s policy of unquestioningly siding with Trump may have made India easier to take for granted, to the point that even a minor departure from Trump’s preferences is treated as unacceptable.

This dynamic is reminiscent of Anton Chekhov's short story “The Ninny,” in which an employer withholds the equivalent of nearly a month’s salary from his children’s governess for arbitrary reasons. The governess accepts each cut without protest ~a passivity that the employer chastises as spineless. The economist Ariel Rubinstein later drew on Chekhov's story to develop a model illustrating how submission can invite exploitation.