Daniel Desrochers and Megan Messerly
An early White House visit by Prime Minister Narendra Modi led to months of negotiations. By July, the Indians believed they had struck an agreement and that Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer were simply waiting on President Donald Trump’s approval. Instead, Indian goods now face a 50 percent tariff after Trump hit the country with a 25 percent levy on its goods and then followed up with an additional 25 percent to dissuade it from buying Russian oil that was set to kick in later this month, a one-two punch on New Delhi and Moscow. The Russian oil purchases — coupled with Trump’s view that India was not lowering its own import tariffs enough — sank the deal.
The unraveling of what had appeared to be a promising trade dynamic between the U.S. and one of the world’s fastest-rising economies illustrates the precarious nature of crafting an economic partnership with a mercurial Trump administration that has freely used high tariff rates to try to bend the world to its will. “We are in a situation now where he is completely upset with India, and the 25 years of effort to build a relationship seems to be going down in 25 hours,” said Mukesh Aghi, the president and CEO of the U.S.-India Strategic Partnership Forum. “We need to arrest this in some manner… because the relationship is critical for both nations.”
The clash also underscores the challenging position the U.S. is in as its hefty tariffs push countries like India and Brazil closer to Russia and China. Brazilian President Luiz Inácio Lula da Silva spoke with Modi on Thursday as the Brazilian leader calls for a joint response to Trump’s tariffs from countries that are part of the so-called BRICS group of emerging economies.
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