The Tariff Shock Puts Team Modi in a Tight Corner
The only way to lower the 25% tax may be to make concessions that will weaken the Indian prime minister politically.
Narendra Modi is in a tight corner on trade.
Photographer: Prakash Singh/Bloomberg
President Donald Trump has put the Indian prime minister in a tight corner. The 25% tariff that he says he’ll impose on US imports from the most-populous nation isn’t significantly higher than the rates he has announced for Southeast Asian countries like Vietnam, Indonesia and the Philippines. But there is a catch: a penalty that will punish New Delhi for its “most strenuous and obnoxious” non-tariff barriers — and for buying Russian military equipment and energy.
The quantum of the retribution was not specified in the president’s Truth Social post, even though the new tariffs are scheduled to come into force from Friday. Therefore, my first reaction is that it’s a bluff — a bargaining tactic. Trump wants last-minute sweeteners thrown into whatever trade deal Narendra Modi’s negotiators have put on the table.