Fresh tariffs cloud economic outlook for trading partner, sparking defiance

Rejecting the US administration's additional 25 percent tariff levy on Indian goods as "unfair, unjustified and unreasonable", India vowed to protect its national interests on Thursday despite gloomy prospects for some sectors.

India's Prime Minister Narendra Modi, addressing a conference in New Delhi on Thursday, was cited by Press Trust of India as saying: "India will never compromise on the interests of its farmers, dairy farmers and fishermen."

US President Donald Trump on Wednesday signed an executive order to impose an additional 25 percent trade tariff on India. The addition takes the total levy to 50 percent, one of the highest among all trade partners. The additional tariffs would be effective 21 days after announcement.

READ MORE: Trump signs order imposing additional 25% tariff on Indian goods

Apart from accusing India of buying Russian crude oil, the United States has demanded greater access to India's agricultural and dairy market in trade talks, according to PTI. Modi declared he was prepared to bear a significant personal cost if necessary.

India's External Affairs Ministry on Wednesday called the US administration's additional levy on Indian goods "unfair, unjustified and unreasonable".

"It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest," said an official statement from the ministry.

"India will take all actions necessary to protect its national interests," it said.

After showing a lot of restraint, India had issued a rebuttal citing examples of the US and European trade with Russia, showcasing how Trump's tirades against India are unreasonable and unjustified, Swaran Singh, a professor of international relations at Jawaharlal Nehru University, told China Daily.

'Unfair deal'

Congress Party leader Rahul Gandhi called the additional 25 percent tariff on Indian goods an "economic blackmail". "Trump's 50 percent tariff is economic blackmail — an attempt to bully India into an unfair trade deal," Gandhi said on X.

Another Indian lawmaker Shashi Tharoor said the move could severely impact India's exports to the US market. India must now urgently and seriously diversify "to other countries and other markets that may be interested in what we have to offer", he said.

"We now have an FTA with the UK," he said: "We are talking to the EU. There are many countries in which hopefully we would be able to, but in the short term, it is definitely a blow," he added.

Indian economist Lekha Chakraborty said India will now "follow 'gravity models of trade', by gravitating its trade away from big partners to 'near shoring' or 'friend shoring'".

Protecting energy security is a priority for India and India will play ahead, projecting her "national interests", said Chakraborty, a professor of the New Delhi-based National Institute of Public Finance and Policy. "The adverse impacts on trade will be short-term."

Expressing deep concern over the potential negative impact, the Confederation of Indian Textile Industry called it a major blow to the industry and sought the government's help in overcoming the current situation.

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"We request immediate government intervention to offset this huge setback. Exporters have their backs against the wall and will have to sell below cost to keep their factories running and avoid mass layoffs," Sudhir Sekhri, chairman of Apparel Export Promotion Council, said.

Abhirup Sarkar, a professor of economics at Kolkata-based Indian Statistical Institute, said with the US being the largest export partner, Trump's announcement would not only hit Indian exporters, but also impact US citizens. "Because they have to cough up extra cost for Indian goods as a result of these abnormally high tariffs," he said.

"Given that Trump is always unpredictable, anything can happen in the next three weeks. You never know," he said. "However, I think it is high time India looked for new export partners."

Contact the writers at vivienxu@chinadailyapac.com