Tariffs and the chicken-out game

The supreme irony of the many ironies swirling around the United States-India tariff row is that petroleum product exports to the US from Indian refineries will not attract the tariffs announced by Donald Trump to "punish" India for importing crude oil and natural gas from Russia.

- DEVANGSHU DATTA

That oil & gas is feedstock for India's exports of petrol, diesel, kerosene and lubricants. Much has already been written about the hypocrisy of the US importing uranium compounds and fertilizers from Russia, so let's not go there.

From an investment and trading perspective, it's clear there is no upside to tariffs for either nation. India would lose access to the world's largest economy, with desi goods priced out of contention. In 2024, goods trade between the two nations amounted to $129 billion—$42 billion in US exports and $87 billion in Indian exports. Those numbers would nosedive.

The American consumer (and US-based manufacturers) would pay a lot more for whatever they import, wherever they import it from. Manufacturers and importers would pass on the costs—it's already happening. For example, the Tata group fabricates aircraft fuselages for Boeing. These are precision components and the manufacturer cannot be easily replaced. So Boeing might hike the price of its planes.