Former U.S. President Donald Trump has once again caused a stir in the world of trade. This time, he asked the G7 countries to put high tariffs—possibly up to 100%—on goods from India. His demand comes from the fact that India keeps buying cheap Russian oil, which the US says indirectly supports Russia’s war in Ukraine. Even though the plan is still being talked about, the thought of higher tariffs has caused a lot of worry in New Delhi and around the world.
How Trump Wants to Put Tariffs on India
Former U.S. President Donald Trump has asked the G7 countries to put tariffs on goods from India, possibly as high as 100%. His move is meant to stop India from continuing to buy cheap Russian oil, which the US says breaks sanctions against Moscow.
India’s products already have to deal with a 25% U.S. tariff, plus an extra 25% for the oil trade. If the G7 countries follow this strategy, Indian goods will cost a lot more in Western markets, which will hurt their ability to compete.
What it means for India’s economy
V. Anantha Nageswaran, India’s Chief Economic Adviser, has warned that these taxes could cut GDP growth by 0.5% to 0.6% this year. A lot of India’s exports to the U.S. are in danger, like textiles, car parts, and machinery.
This could lead to:
- Exporters’ profits are going down.
- Less output in important areas
- Job losses in businesses that need a lot of workers
- Less investment from other countries as companies look for better places to sell their goods
Upstream industries like logistics and raw materials may also be affected, which would make the total economic stress worse.
Is India able to handle the stress?
India can lessen the effects in a number of ways:
- Spread out selling markets: To rely less on the G7, build stronger trade ties with Asia, Africa, and Latin America.
- Help for people in their own country: Give exporters who are being hurt grants, loans, and tax breaks.
- Diplomatic push: Make the case that energy security can’t be compromised and try to get special treatment for critical items.
- WTO route: Say that taxes are unfair or discriminatory in accordance with the rules of international trade.
- Energy strategy: Slowly become less dependent on Russian oil by buying oil from other countries and investing in green energy.
What do you think about Trump’s recent move?
India could see slower growth, fewer exports, and more job market stress if Trump’s plan is accepted by the G7. Indian can lessen the impact, though, by expanding its markets, boosting internal support, and using diplomacy. The next few months will show whether the G7 countries fully support Trump’s tough stance or take a more moderate attitude.
