A Miscalculated Blow

Just when it seemed that India and the United States were inching closer to finalizing a new trade agreement, former US President Donald Trump, now a presidential candidate for 2024, has thrown a spanner in the works.

- 

On Wednesday, Trump announced a sweeping imposition of a 25 per cent additional import tariff on Indian goods, effective from August 1. In an unexpected and undiplomatic twist, he also included a penalty—yet unspecified—citing India's continued purchase of Russian crude oil and military hardware.

This announcement, which caught Indian policymakers and exporters off guard, poses significant risks for bilateral trade between the world's two largest democracies. It underscores not only Trump's unpredictability but also the deeply transactional nature of his "America First" policy. At its core, a tariff is a tax on imported goods, paid by importers in the US, but eventually passed on to consumers and businesses. When such tariffs are imposed in bulk, as in this case, they essentially disrupt pricing mechanisms and reduce the competitiveness of imported goods.