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India shouldn’t succumb to Trump’s high-pressure tactics. Its riposte should be MIGA (make India great again) by asking US manufacturers to set shop in India
US President Donald Trump (left), Indian PM Narendra Modi (right). (Image: PTI)
On July 30, President Donald Trump imposed a 25% import duty on imports of goods into the US with effect from August 1, 2025. Not content with the stiff duty, he has also vaguely announced stiff penalty for India daring to import oil and arms from Russia in defiance of his and NATO’s stance of boycotting all trade deals with Russia for not ending its three-year old war with Ukraine.
He had given dark hints that such penalty along with tariff could be as high as 100% on the three defiant nations—India, China and Brazil.
In 2024-25, bilateral trade between the two nations reached USD 186 billion, with India enjoying a trade surplus of USD 44.4 billion. India exported USD 86.5 billion worth of goods and imported USD 45.3 billion. In services alone it recorded a surplus of USD 3.2 billion.
In the face of such a massive trade deficit, President Donald Trump was itching to up the ante. It is not as if the US was having trade deficit only with India. On the contrary, the United States has always had an overall trade deficit. This means the country imports more goods and services than it exports. In 2023, the U.S. goods and services trade deficit was $773.4 billion, according to the U.S. Bureau of Economic Analysis (BEA) with services surplus of US$ 288.2 billion coming to its rescue to cut the massive deficit from import of goods of the staggering order of US$ 1061.7 billion. This is what has rankled the POTUS. While he is right in his slogan of MAGA (Make America Great Again) by among other things manufacturing in the US, he is tilting at the windmills by ratcheting up import tariffs.
His obsession with tariff has already started backfiring what with the resultant reduced imports translating into inflation on the back of supply-side shortage. Those in the know therefore aver that it won’t be long before Trump climbs down his high horse. Moreover, his record of rolling back his decisions and announcements has earned him the moniker TACO—Trump Always Chickens Out. It is therefore possible that the crushing tariff of 25% on imports from India may be a short-lived phenomenon. It is worth noting that he has exempted pharmaceutical imports from India from the twin pincer of stiff duty and penalty which testifies to the fact that the US healthcare system has got inured to generic imports from India and Trump doesn’t want to rock the sensitive healthcare budget of the nation.
Japan and the EU have gotten away with a slap on their wrists—15% tariff on the back of heightened investments in the US in step with the MAGA initiative of Trump. However, the hastily cobbled up US trade deals with Vietnam, Japan, and the EU are beset by confusion regarding timing, implementation, and investment conditions so much so that they are labelled “flimsy napkin deals” by some. The devil is in the detail. The purported US$550 billion Japanese investment pledge is disputed, with discrepancies in the figure and concerns over the terms and control of the funds.
With the US accounting for less than 3% of India’s import-export basket, it shouldn’t be too challenging for India to shift focus away from the US though admittedly prizing open new markets isn’t an easy task at least in the immediate run. India simply cannot dump Russia which has been a more reliable ally in the matter of supporting India and supply arms. Oil imports from Russia have surged to 36% from about 3% in the pre-Ukraine war era. Besides, cheaper prices, the gravitas is the rupee trade agreement that cushions India from the excessive dependence on the greenback.
As for the US insistence on India opening up its markets for its farms especially dairy products, the Indian government cannot be faulted for protecting Indian farmers from the deluge of imports from the US. Already the Indian farm sector is not doing well with a population employed in it of the staggering order of 46% contributing a shade more than 16% of the Indian GDP. It is simply not possible to cast them to the wolves.
No country should allow itself to be held to ransom on the food front which could well happen when hostilities break down. Iraq had to enter into oil for wheat deals including with India when the US choked it of food including baby food in its relentless desire to bring the then President Saddam Hussein to his knees. Furthermore, India is rightly insisting on feed certification as a bargaining chip knowing pretty well that the US will not be able to furnish one because it is well known that the cows in the US are also fed with the slaughterhouse wastes namely bones, blood, and feather.
In short, India shouldn’t succumb to Trump’s high-pressure tactics. Its riposte should be MIGA (make India great again) by asking US manufacturers to set shop in India. FDI any day is better than unchecked imports.
The writer is a senior columnist. He tweets @smurlidharan. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.
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