US President Donald J Trump recently took an aggressive action on India by imposing an additional tariffs of 25 per cent over and above 25 per cent already imposed recently as the order cites threats to the United States by the Government of Russian Federation as the India continues to purchase of Russian Federation Oil, which has not been responding adequately to the peace efforts taken by President Trump but continues to attack Ukraine.

US President Trump feels that purchasing oil from Russia in this period of Russia and Ukraine war, gives the necessary financial support to Russia and that would directly or indirectly help Russia in carrying out its war against Ukraine. It can be recalled that President Trump had earlier expressed his dissatisfaction with India over its oil purchase from Russia. This order imposing an additional tariff of 25 per cent on Indian imports as an action against continued purchase of Russian oil, established a process for the potential imposition of similar tariffs on other countries that directly or indirectly import oil from Russia. These measures are taken as the US feels that Russian Federation actions in Ukraine pose a threat to US national security and foreign policy.

The reasons stated that India’s importation of Russian Federation oil undermines US efforts to counter Russia’s harmful activities. India’s subsequent reselling of this oil on the open market, often at significant profit, further enables Russia to fund its aggression.

By imposing a 25 per cent tariff, President Trump aims to deter other countries from supporting the Russian Federation’s economy through oil imports. China, India and Turkey are the biggest customers of Russian oil and there are other countries too like Hungary, Belgium, France, Slovakia and Netherlands. These European countries bought natural gas.

India, in its response, stated that India began importing from Russia because traditional supplies were diverted to Europe after the outbreak of the conflict. The United States at that time actively encouraged imports by India for strengthening global energy markets stability. It’s a known fact that India depends upon external countries for supply of oil as it imports 85 per cent of its requirements and oil is the essential requirement for India and it is in national interest to ensure supply of oil to the people. Apart from Europe which not only imports energy, but also fertilizers, mining products, chemicals, iron and steel and machinery from Russia, the US continued to import Uranium Hexafluoride for its nuclear industry, palladium for its EV Industry, fertilizers as well as chemicals from Russia. Hence, India has categorically stated that in this background, targeting it is unjustified and unreasonable. India further said that like any major economy, it will take all necessary measures to safeguard its national interests and economic security.

However, President Trump may be irritated with the tough stand taken by India on opening of the agricultural sector and animal husbandry, etc., and the interim/ final trade agreement could not be achieved within the deadline.

But India made its intention clear. “We have already made clear our position on these issues, including the fact that our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India,” the Indian government said in a statement. It is therefore extremely unfortunate that the US chose to impose additional tariffs on India for actions that several other countries also taking in their own national interest.

With this additional tariff, India has the highest tariff of 50 per cent along with Brazil which is also facing highest 50 per cent. This additional tariff on India will be effective from August 27. The textiles exports, gem and jewellery, automobiles and auto components, marine products and some agricultural and processed foods are likely to be significantly affected by the US’ additional tariffs on the Indian goods. Other sectors that could be impacted include steel, aluminium and some other petrochemical products. However, India can reduce the adverse impact of the US tariffs by reducing operational costs for manufacturers through ease of doing business measures. It can also go for market diversification.

Few experts have said that this could be an opportunity for India to bring in significant reforms to reduce the burden by improving the supply chains. Efforts should also be made to reduce logistics cost and pave way for easy and quick turnaround time at ports and airports. Indirectly referring to the US tariffs, Prime Minister Narendra Modi stressed that India will never compromise with the interests of its farmers and fisherman. He further added that while he knew he would ‘have to pay the price’ for his stand, he said he was ready to do it for farmers. He is bang on, to say the least.

Whatever the motive of Donald Trump, the tariffs being imposed by the US on India are unreasonable and unjustified. Such unreasonable decisions will have an adverse impact on the long-standing relationship India and USA have. Hopefully, a trade pact between India and the US will reduce tensions between the two countries.