► Wang Kaiwen of Wen Observer Network

The US raised tariffs on Indian goods to 50 per cent, citing India's continued purchases of Russian oil. The new tariffs came into effect on August 27, making India one of the economies hit hardest by US tariffs.

As India¡¯s largest export market, U.S. new tariffs threaten India¡¯s exports and employment and India¡¯s exporters are prepared to respond to a sharp decline in U.S. orders.¡±The Economic Times says India is facing the worst trade shock in years.Economists expect U.S. tariffs to slow India¡¯s economic growth.

On the eve of the new U.S. tariffs, Prime Minister Modi made a tough statement, saying the government he led would protect the interests of farmers and small regardless of how much pressure he faced.

Previously, India and the United States went through five rounds of trade negotiations. India was once optimistic about the outcome, believing that tariffs could be around 15%. However, as the effective date of tariffs approaches, the United States has not given India a "surprise".

An official at the Indian Ministry of Commerce and Industry, speaking on condition of anonymity, told Reuters on the 26th that the Indian government has given up any hope that the United States will immediately reduce or delay tariffs.

The officials added that exporters hit by the tariffs would receive financial support from the Indian government and encouraged them to explore markets in China, Latin America and the Middle East.

According to the Office of the United States Trade Representative, the bilateral trade volume between India and the United States in 2024 is about $129 billion, with U.S. merchandise exports to India totaling $41.8 billion and imports of $87.4 billion, resulting in a trade deficit of $45.7 billion.

The new tariffs are expected to affect more than half of India's exports to the United States, covering clothing, jewelry, footwear, furniture, chemicals and other sectors.

Image for Trump (left) and Modi (data map / foreign media)

"American customers have stopped placing new orders," Pankaj Chadha, chairman of the Indian Engineering Export Promotion Council, told Reuters. "Due to these additional tariffs, the export volume (of India to the United States) may drop by 20% to 30% from September."

The high tariffs threaten India's competitiveness in exports, making it difficult to compete with competitors such as China and Vietnam, Bloomberg said at the same time, it also raised questions about Prime Minister Modi's ambition to turn the country into a global manufacturing hub.

"This is a strategic shock that threatens India's long-term foothold in the U.S. labor-intensive market. This could lead to a massive wave of unemployment in (India's) export centers and weaken India's participation in global value chains." said Ajay Srivastava, founder of the New Delhi think tank Global Trade Research Initiative.

He added that tariffs would benefit India¡¯s competitors and that even if tariffs are removed in the future, India could be excluded from key markets.

Indian rating agency CareEdge predicts that the annual growth rate of India¡¯s GDP could fall from 0.8 percent to 1 percent if the high U.S. tariffs persist.

CareEdge chief economist Rajani Sinha told the Economic Times that high tariffs could weaken India's competitiveness, lead to the loss of market share and amplify the impact on economic growth.

However, some economists point out that India¡¯s relatively low share of exports to the U.S. (about 2% of GDP), coupled with strong domestic demand, will help mitigate the tariff shock. Bloomberg mentions that India¡¯s private consumption accounts for about 60% of the country¡¯s GDP.

Meanwhile, officials from the Indian Ministry of Commerce and Industry said the government has selected 50 countries as destinations to expand India¡¯s exports, textiles, processed foods, leather products, seafood and more.

However, Chadha said that Indian exporters think there is limited room to explore the domestic market or other countries' markets.

India was one of the first countries to open trade talks with the Trump administration, but the country¡¯s high tariffs and protectionist policies in agriculture and dairy products have frustrated U.S. negotiators.

In recent years, as Trump has repeatedly accused India of buying Russian oil, relations between India and the United States have worsened further.New Delhi has argued that such purchases help stabilize the energy market and said it will decide whether to continue buying Russian oil based on economic interests.

On August 25th, Modi made a tough statement on US tariffs, saying that no matter how much pressure it faces, the Indian government will never let small entrepreneurs, farmers and farmers be hurt. "No matter how great the pressure is, we will continue to strengthen our strength to resist challenges."

Indian Prime Minister Modi, video screenshot

However, Bloomberg quoted several people familiar with the matter on the 26th to disclose that while the Indian government made a tough stance, India also plans to cut Russian oil imports. People familiar with the matter said this was a "moderate concession" made by India to the United States, but it also showed that the country had no plans to sever relations with Russia.

The report noted that the deteriorating relationship has prompted India to gradually move away from the United States and deepen its ties with other BRICS members.Indian Foreign Minister Sujetin said during a visit to Russia last week that India and Russia hoped to increase bilateral trade by 50% over the next five years to $100 billion.

India's relationship with China, on the other hand, is also warming up, Reuters said Modi will visit China at the end of this month, which will be his first visit to China in seven years.

China is one of India's largest trading partners. In 2023, the bilateral trade volume between China and India will be US$136.22 billion, a year-on-year increase of 1.5%. Among them, China's exports to India were US$117.67 billion, a year-on-year increase of 0.8%, and China's imports from India were US$18.55 billion, a year-on-year increase of 6.1%.

On August 19, local time, Indian Prime Minister Modi met with the CPC Central Committee Political Bureau and Central Foreign Office Director Wang Yi at the Prime Minister's Office in New Delhi. Modi said that India is a partner rather than an opponent, facing the common task of accelerating development, we should strengthen exchanges, enhance understanding, expand cooperation, so that the world feels the huge potential and bright prospects of India-China cooperation.

Wang Yi said that under the current international situation, the strategic significance of China-India relations is more emphasized, and the strategic value of China-India cooperation is more prominent.We will seriously implement the important consensus of the leaders of the two countries, strengthen exchanges and cooperation in various fields, promote the stability of China-India relations, better benefit the people of the two countries, and make the due contribution of the two great civilizations of China and India to the cause of human progress.

Further reading

Bull: Angry Modi doesn't answer the phone after Trump publicly calls "humiliation"

How passionate the feelings used to be, how strong the anger is now.

Trump and Modi meet to hug.

Trump and Modi, the two previously met, must be tightly embraced, now the two not only do not meet, not even phone calls, Trump more rarely name insults Modi.

Not that we don¡¯t understand that the world is changing too fast.

According to German media reports, Trump tried to call Modi four times recently, but Modi refused.

Please note: four times.

The Chinese say "nothing but three", but the Indians say I hate three the most, and four times is not enough. Trump, you continue to be shut out.

Why is ?

Modi was angry.

In the words of German media, Modi's outright refusal was motivated by both "deep anger" and "prudent considerations."

In Modi's opinion, Trump stabbed him in the back, which was too inauthentic.

Anyway, in public, Modi likes Trump very much and once publicly stood for Trump. In the words of Indians, "Modi always hugs Trump like a long-lost brother."

But what will Trump do to India?

Trump wants to earn money from India, and the 25% tariff is not negotiable. He also imposes another 25% tariff on the grounds that India buys Russian oil.

As a result, Indian goods exported to the United States at an unprecedented rate of 50%, which was officially implemented on August 27.

The highest in the world, alongside Brazil.

The Indians thought that they were my close friend, Lord America, and finally discovered that India was the old-fashioned opponent of America.

That¡¯s not enough, Trump has also criticized India as a ¡°dead economy.¡±

Indians are being scolded for being the fastest growing major economy in the world every time, and you call us a "death economy"?

India is a big country after all, and Modi also has a strong personality. So, Trump's phone call was not answered.

Trump calls again, Modi will not answer again.

I would have heart to the moon, but the moon shines ditch!

And, a few days earlier, Modi also publicly stated, ¡°I will tell our small businessmen, our shopkeepers brothers and sisters, our farmers brothers and sisters, our livestock brothers and sisters ... Whether it be our small businessmen, farmers or farmers, for everyone, I assure you that your interests are the most important.¡±

He stressed that the Indian government will never allow small entrepreneurs, farmers and farmers to be harmed, "no matter how great the pressure, we will continue to build up our strength to withstand the challenge."

Moreover, India also stated that I will continue to buy Russian oil.

Indian Foreign Minister S Jaishankar said: "It's ironic that an American government that flaunts to be pro-business accuses others of doing business. If you don't like Indian oil or refined oil, don't buy it. No one forced you. But Europe bought it, and so did the United States."

What do you mean?

The big stick of the United States has met the hard bone of India.

The temper of the Indians has also risen, and we will not kneel.

But is Trump a good man?

Recently, when it comes to the Russia-Ukraine conflict, Trump has flaunted his "achievements" in mediating the India-Pakistan conflict, and also disclosed a detail.

He said: "I talked to Modi (at that time) and threatened him to stop the trade agreement within 24 hours if he didn't stop the war. But it only took him five hours to stop."

You can't believe Trump's voice and emotion.

Trump has previously claimed that he prevented a nuclear war between India and Pakistan. This was flatly denied by India, which believes that the truce between India and Pakistan has nothing to do with Trump and is the initiative of Pakistan to seek peace.

Trump, you are eating Indian tofu!

But Trump did not give up, always talking about mediating peace between India and Pakistan, and now he has gone even further, publicly naming Modi, saying that Modi has implemented faster than he asked.

This is not publicly humiliating Modi and what?

I saw that many Indian bloggers exclaimed, this is a "breaking news", Modi, you are too weak.

Trump and Modi are ¡°true friendship¡± comics.

Oh, and Trump used to say that in the India-Pakistan war, five fighter planes were shot down; Now it's been upgraded again and says there are 7.

0:5 is a question on the Internet about the conflict between India and Pakistan. It can be said to be India's biggest embarrassment this year.

Because the whole world is inclined to Pakistan's statement, China fighter jets were used to shoot down five Indian fighter jets.

Trump is also the first leader in the world to publicly mention five fighter planes.

I saw that after Trump spoke, India¡¯s opposition leader, Rahul Gandhi, immediately handed over Trump¡¯s video, asking, ¡°Modi, what is the truth about the 5 aircraft?

Finally, India failed to make it to the Air Force Chief of Staff to "clarify": it was India that shot down five Pakistani fighter jets.

The whole world is dumbfounded. Can you still do this in India?

Good news, how did you endure three months without announcing it?

But now, Trump has said 7 more, and that's how he slapped his face directly. What do you do about India?

It must be said that in the field of diplomacy, dignity is never given to others, but is won by oneself.

Finally, what do you think?

Let's say three superficial points.

First, India should have woken up long ago.

This has been said repeatedly before.

Because there are Westerners lamenting that Trump is undermining 20 years of US diplomacy with India, pushing India towards Russia and China.

What to regret!

In fact, over the past 20 years, India has come together, and the fantasy of becoming an ally of the West is both a dream and more than a dream.

India is not Japan, after all, can the West not tolerate a rising China, but can it tolerate a rising individual India?

If India needs China, India is a code; if India does not need India, India is a broken shoe.

If the shoes are broken, sooner or later they will be discarded.

Trump just kicked the broken shoe into the trash in the most direct and most insulting way.

Second, see Trump win and learn PK Modi win and learn.

After all, these two distinct personalities leaders have all been known for winning.

In many international struggles, they always claim that they have won, and they have won all of them.

Now well, the two old wicked men, short soldiers together, directly acted.

Oh, really thin, people's feelings are evil, the rain sends yellow dawn and falls easily. "When I used to go with people to see the moon, they called me sweet, now the new people have changed the old people, they called me cow lady."

On the power field, yesterday intimacy, today face ungrateful, but normal.

That¡¯s Trump¡¯s fist hard, or Modi¡¯s wrist hard, and we¡¯ll ride the donkey and watch the song¡ªgo and see.

Third, it is not excluded that there is a sudden reversal.

I always feel that we must have a clear understanding of this.

I was striking you to die and live, and suddenly the two looked right in the eye and joyfully entered the cave.Al it was dramatic, but the wrongdoer was the wrongdoer, what could not happen?

After all, the only certainty we know in this world is Trump's uncertainty.

After all, although Trump publicly insulted Modi and Modi refused to answer the phone four times, Modi has never publicly named Trump by name.

People stay on the line and see you later.

Moreover, there are various indications that, despite the tough talk of continuing to buy Russian oil, some Indian oil companies are also quietly reducing their imports.

Modi still maintains some illusions; Trump is more about maximum pressure on India.

Only, even Trump's hard kick, eventually turned into a small puff, but the humiliation of the Indian heart, estimated for a long time can not be eliminated.

After all, without comparison, there is no harm.

Trump hits the face when he says he hits the face, but did China, even when it had the worst relationship with India, say such things to insult India and Modi?

Real strength never lies in being hoarse, but in being calm.

Really, India is blessed to have a neighbor like China with a consistent policy of emotional stability.

India is not happy.

Where to go, Modi needs to get more clear.