By Anjan Roy
TORONTO: US president, Donald Trump, has implemented his threatened additional tariffs on Indian exports of 25 per cent on August 6. This tariff will be loaded on the earlier “reciprocal tariffs” of 25%, taking the overall tariff to 50% in just 21 days from now.
With this latest move, Trump has imposed his first secondary sanction for Russian oil purchases on India, without simultaneously imposing the same on the other major buyer of Russian oil, namely, China.
The combined incidence would put India in a singular position of attracting highest US tariff of 50%, which might ensure a total black out of Indian exports on grounds of final prices.
This latest move on the part of US administration will have deep and some permanent changes in Indian foreign policy as well as on its trade. India has indicated that it will take reciprocatory measures keeping in view its national interests. India has already explained that Russian oil purchases were in view of market conditions and it was not an endorsement of Russian policy on war.
With Trump’s gun-boat trade policy, India would now be further coerced to buy Russian oils and energy products. In view of the American onslaught, India might seek better pricing of oil from Russia and make some gains on oil purchase bill. On the other hand, India should divert from America to alternative sources for some of its major purchases.
India imports some high value products like aero-space items from USA. Indian civil airliners procure large number of aircraft from the US Boeing Company and these might become costlier in comparison with Airbus Industrie’s aircraft. Shifting large aircraft orders could have implications for Boeing Company and its operations, at least temporarily.
In diplomacy, India-Russia ties might get further bolstered, which had recently somewhat frayed. India had moved considerably towards the western camp and integrated with these countries militarily, as in participation in large joint operations. Weapons purchases had also been diversified and Russian weapons purchases were reduced.
However, seeing the unpredictability and viciousness of American attacks on India, these relations would certainly get soured at least for the time being. India’s pursuit of an independent foreign policy would further be strengthened and its tilt towards an alternative to America led geo-politics should become more pronounced.
In fact, foreign minister, S Jaishankar, has been pursuing such a diplomatic route ever since he came into the foreign office. Now, his line of policy should get further institutionalised.
Trump has made this announcement of secondary sanctions in the midst of America’s running dialogue with Russian leader Vladimir Putin. In announcing his decision on India, Trump said that he had various inputs from senior officials of the US administration on the drift of Russian policy on Ukraine war.
One can presume that the last round of dialogue between Vladimir Putin and Steve Witkoff does not give reasons for more confidence for a positive outcome. US president is seeking to maximise his pressure on Russia to speedily conclude his war in Ukraine.
Willy nilly, the move in a way drags India into the overall geo-political moves of the rival super powers —US and Russia—carrying out their jousts over the war in Ukraine. India has steadily refused to back down on Trump’s threats of secondary sanctions on Indian exports.
Take it or leave, India without its own doing, is now in the group of the leading geo-political heavyweights of the world and for that position India will of course have to pay a price. As Indian exports are priced out in US markets, it will be forced to look out for markets elsewhere.
While there is some undertone of admiration for Indian stand and refusal to kow-tow before the mercurial US president, the responses are naturally muted except two. Trade and geopolitics have now got intertwined with each other.
Trump’s special envoy, Steve Witkoff, is currently holding talks with Putin in Moscow and the two met on Tuesday, which were described as “constructive” by a Kremlin spokesman.
India becomes the first geo-political victim of Trump’s effort to put further pressure on Kremlin to speedily end its war in Ukraine. Obviously, India is also caught in the situation as it no longer has any options for moving out of its purchases of Russian oils. That will amount to being too submissive and it will also hurt its interests.
Alternative oil purchases could be far more damaging than at least some effects on India’s US exports. After all, US exports are a small part of overall Indian economy and the economy is not as much export driven as other major countries.
The additional tariff was being anticipated, but significantly enough Trump has desisted from doing the same on China, further vindicating Donald Trump’s “TACO” image.
China has deftly avoided attracting the secondary sanction as it is in the midst of a trade talks with the USA currently. This defies logic as China has been a far more vocal and effective backer of Russia’s war in Ukraine. (IPA Service)
