2025.08.28

Trump meets with Modi at the White House

Author |Qian Xiaoyan, First Finance

The punitive tariffs imposed by the United States on India came into effect as scheduled, and India has no intention of "softening" now.

According to Xinhua news agency, the U.S. government imposed a 25% punitive tariff on Indian imports of Russian oil on printed US goods officially entered into force on 27th, the tariff rate imposed by the U.S. on Indian products cumulated up to 50%.

Faced with pressure, the Indian government has announced a number of policies a few days ago, focusing on helping farmers and small business owners cope with the impact of tariffs, while drawing an uncompromising "red line" to the US. In addition, according to sources, US President Trump tried to talk to Indian Prime Minister Modi four times recently, but Modi did not answer.

Liu Zongyi, director of the Center for South Asia Studies at the Shanghai Institute of International Studies, told the First Financial Reporter that India's purchase of Russian oil is not a new issue in U.S. -India relations. India believes that this practice has long been tacitly agreed by the United States. India is taking the opportunity to make a fuss and is unwilling to compromise or make too many concessions.

Trump and visiting Modi attended a joint press conference at the White House on February 13th Source: Xinhua News Agency

Modi did not answer the phone.

On August 27, when the 50% punitive tariff came into effect, Modi chaired a cabinet meeting. According to Indian media reports, the meeting focused on how India should respond to the impact of U.S. tariffs, but Modi himself did not publicly express his position on the tariff dispute that day.

In the United States, U.S. President¡¯s adviser Navarro on the 27th further pressured India to stop buying Russian oil, saying India¡¯s actions were to damage the United States, but then he turned back and said: ¡°If India stopped buying Russian oil, tomorrow the tariffs could be reduced by 25 percent.¡±

Earlier, Trump shouted from a distance on the 26th. In his speech, he mentioned Modi as a "great person", saying that he had a phone call with Modi in May and facilitated a ceasefire between India and Pakistan within five hours. This statement has been questioned by India before, and it is dissatisfied. Perhaps for this reason, Modi is no longer willing to answer calls from Trump.

At the same time, in trade negotiations, Trump often "doesn't play cards according to the routine" in the phone call. For example, Trump raised the tax rate raised in the previous negotiations by himself in the phone call with Vietnamese leaders. For the above reasons, Modi is particularly cautious about answering the phone call.

Jaishankar Jaishankar, India's foreign minister, attacked the US move to impose tariffs on India over its energy trade policy at an event in New Delhi on August 23, saying it was "hilarious" that the move came from a "pro-business" US government. "If you don't like buying oil and refined petroleum products from India, don't buy it, no one is forcing you to buy it," he said.

So far, the US and India have held five rounds of negotiations on trade issues, and no agreement has been reached. A new round of bilateral trade agreement talks between India and the US, scheduled for August 25-29, has been postponed, and a trip to India by a US trade delegation has not taken place. During the negotiations, Indian officials were optimistic that the US tariff ceiling with India would be set at 15%.

In April, when Trump announced his so-called "reciprocal tariffs," India boasted of a relatively low 26% tax rate. Now, times have changed, and India's 50% tax rate is not only much higher than that of neighboring countries such as Pakistan (19%) and Bangladesh (20%), but also higher than that of economies such as Vietnam (20%) and Indonesia (19%).

Modi rejected Trump's four calls data map

India draws "red line"

Pancage Chada, chairman of India's Engineering Export Promotion Commission, said: "U.S. customers have stopped placing new orders, and the impact of these additional tariffs (India-related products) could reduce exports by 20 to 30 percent."

The Indian government estimates that US tariffs will hit $48.20 billion worth of Indian exports. In 2024, the US-India trade in goods is about $128.80 billion, and India's trade surplus with the US is $45.80 billion, according to data from the US Department of Commerce.

In response to tariff pressure from the United States, the Indian government has taken a series of measures to deal with the challenges. Sujashen said on the 23rd that the negative impact of the trade dispute between the two sides on the Indian economy will not be permanent."The most important thing is that we have drawn some red lines. No one said the negotiations broke down. In this sense, negotiations are still going on."

Indian trade ministry officials said India¡¯s tariff-stricken exporters will receive financial assistance and are encouraged to diversify exports to markets such as Latin America and the Middle East.The official said India has identified 50 countries and regions as the focus of India¡¯s export growth, in textiles, food processed products, leather products and seafood.

Small editorTagged grace.

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