NEW DELHI: As the deadline for tariffs neared, US President Donald Trump imposed the threatened tariff of 25 per cent on India starting on August 1 as the prolonged negotiations appeared to have stalled. His executive order, issued late on July 31, did not include penalty tariffs on buying Russian energy or for BRICS membership, which he had also threatened.
When Trump initially threatened the 25 per cent tariff, India said defiantly that it “will take all steps necessary to secure our national interest”.
In the order setting the tariff rates for various countries, he claimed he was acting because “large and persistent annual US goods trade deficits constitute an unusual and extraordinary threat to the national security and economy of the United States”. The 25 per cent tariff for India was higher than the rate ranging between 15 per cent and 19 per cent he imposed on most countries listed in the order, which takes effect at midnight (9.30 a.m. in India).
While India was one of the first countries to start negotiations with the US, the talks appeared to have foundered, and Trump made the threat of 25 per cent on July 30 but later that day, he held out a ray of hope, saying, “We’re talking to India now, we’ll see what happens”. But it appears that last-minute negotiations did not lower the tariffs.
While the negotiations were taking place, Trump repeatedly called Prime Minister Narendra Modi and India his friends. As recently as last week, he said that a deal was imminent.
India’s Commerce Minister Piyush Goyal also sounded optimistic, saying last week that the negotiations were making “fantastic” progress.
The part of his executive order that would apply to India said that some “trading partners, despite having engaged in negotiations, have offered terms that, in my judgment, do not sufficiently address imbalances in our trading relationship or have failed to align sufficiently with the United States on economic and national-security matters”.
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