5 ways India may counter Trump tariffs as trade tensions flare up

Ties between the United States and India soured after US President Donald Trump announced nearly 50 per cent tariffs on India, replacing China with New Delhi as the prime target. The Trump administration argued that the move was undertaken because of India’s continued purchase of Russian oil amid the war in Ukraine.

However, in response to the Tariffs, India called out the duplicity of standards of both the West and the US in particular, since they continue to trade with Russia despite the war. India also pointed out that China purchases more oil from Russia than India, yet the Trump administration failed to take a similar stance on the matter.

While the impact of the tariffs would not be immediate for the Indian consumers as much as it would be for American consumers, it would still be significant. The tariffs would cause immense pressure on Indian exporters, with their American buyers looking for alternatives due to the price hike. If India’s manufacturing sector is impacted, it would automatically lead to a rise in unemployment and a decline in purchasing power.

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As India continues to deal with the wrath of Donald Trump, here are the five steps it can undertake to navigate the rough waters with the Trump administration.

5 ways India may counter Trump tariffs

• Lobby with Indian-origin Congresspersons and top corporate bosses for their interests

When Trump increased tariffs on China, American businessmen like Jensen Huang, Bill Gates and Elon Musk all came out in China’s favour. Something like this rarely happens for India.

Hence, New Delhi should lobby with half a dozen Indian-origin Congressmen and scores of CEOs in business groups, including Microsoft, Google and Adobe, to put forward its case.

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• Look for an integrated BRICS effort against Trump tariffs

Trump’s wrath against BRICS, a group of nations initially comprised of Brazil, Russia, India, China and South Africa, has been apparent from the time he returned to the White House. The Republican firebrand is expecially sceptical towards the prospect of the group pursuing “De-Dollarisation”.

While Russia is already facing American sanctions, just like India, Trump imposed high sanctions on Brazil and China as well. Hence, India can join hands with fellow BRICS nations to come up with a plan to resist Trump’s tariff policies.

In light of this, Brazil’s President Lula da Silva has already called for a meeting on the issue. Not only this, Prime Minister Narendra Modi is expected to discuss the matter at the Tianjin SCO summit when he visits China at the end of this month.

• Phase out Russian oil consumption

Apart from this, India also needs to consider whether it can bite the bullet and offer a headline-grabbing deal for a phased reduction in the purchase of Russian oil. Although his change would impact the global oil prices.

• Give Trump some concessions

Apart from this, they can also give concessions on premium agricultural products. However, that would have a significant impact on the Indian farmers, an option which India might not incline towards.

Prime Minister Narendra Modi has already maintained that India will ’never compromise on the interests of farmers… even though we will have to pay a heavy price for it’, effectively rejecting Washington’s desire for Indian purchase of US agricultural products.

• Retaliation 

Just like China, India can also hit back with retaliatory tariffs. However, India does not have the same kind of leverage in American markets as China does. For example, China has a strong hold of rare-earth, which is something that the American defence sector needs.

Hence, it will be interesting to see how India would tackle this issue.