Mumbai: Dealing with the unpredictable US President Donald Trump will complicate things for smart politicians, including Prime Minister Narendra Modi. Chaotic negotiations are “unsustainable”, but resetting the global trade order will accelerate fragmentation of economies and markets, decelerate growth, and economic freedom.
Trump’s latest post on X that he will be substantially raising (is it 100%?) US tariff on India for buying Russian oil is indeed a big threat. If he walks his talk, the India-US relations will further strain and the impact on India’s exports to the US can be worse than thought earlier.
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India must hold firm on its insistence, and safeguard farm and dairy products at any cost, and uphold the 'Incredible India' mantra'.
Tariffs are sending shockwaves through the global economy, and the uncertainties the developing economies, including India, face today are no longer hypothetical, but real.
“Dealing with the “unpredictable President Trump” will complicate things for smart politicians, including PM Modi. Chaotic negotiations are “unsustainable”, but resetting the global trade order will accelerate fragmentation of economies and markets, decelerate growth, and economic freedom. Trump’s “Liberation Day” will become a “Destruction Day” as the emerging global trade order is seen as devastating and unpredictable,” said Engr Setia Sanjiv, a veteran, Dubai-based NRI investor and retired CEO of a leading multinational firm.
In fact, Trump's tariff tantrums paint a sobering picture. President Trump forgets an undeniable truth, the global fragmentation is a growing risk to today’s interconnected world.
“Though India has a trade surplus with the US, it has diversified its export markets to mitigate the potential risks. India is also in the process of diversifying its exports to a dozen South American countries, and further enhancing trade with the UK, South East Asian countries, Japan, Australia, and a few friendly nations in Europe, Africa and the Middle East.
Top five export destinations, recorded positive growth in April-June 2025 vis a vis April-June 2024 were USA (22.18%), China (17.87%), Kenya (69.83%), Germany (10.79%) and Australia (14.01%). Top five import sources witnessed growth in April-June 2025 vis a vis April-June 2024 were China (16.33%), UAE (28.73%), Ireland (281.04%), USA (11.68%) and Hong Kong (33.22%).
According to ECB’s executive board member Piero Cipollone, since 2018 the intensifying power struggle between the US and China has led to tit-for-tat tariffs affecting nearly two-thirds of the trade between these two economic giants. Starting in 2020, the pandemic caused unprecedented disruptions to supply chains, which prompted a re-evaluation of the balance between global integration and resilience. In 2022 Russia’s unjustified invasion of Ukraine not only triggered an energy crisis but also deepened a geopolitical divide that continues to have worldwide repercussions. We are now facing the rising risk of economic fragmentation within the western bloc itself, as new trade barriers threaten long-standing international partnerships.”
“The latest retaliatory tariff threat on India, effective from this Thursday (Aug 7) and other countries will have a larger negative impact on the US than on other nations, particularly India. The US economy is under pressure due to growth and inflation worries. The latest US payroll data is weak. The dollar index (DIX), which tracks the strength of USD, is also hovering around 98-99 levels,” said R Madhusoodanan, a former banker and a wealth management expert.
“Though India has a trade surplus with the US, it has diversified its export markets to mitigate the potential risks. India is also planning to diversify its exports to a dozen South American countries. Though there can be temporary setbacks in certain vital sectors, India is mature enough not to succumb to pressure but to focus on strengthening domestic goods and services to make it globally competitive. The move is more of a drama than a policy, Madhusoodanan, pointed out.
“The Indian economy is resilient and diversified. The economic progress has been remarkable. The Government of India should hold firm in its insistence on protecting its farm and dairy products and make hasty concussions in face of American provocations,” said a US-based, renowned inventor Dr Mukund S. Chorghade.
The Indian exports to the USA including goods and services, pharmaceuticals, food and spices, diamond processing will continue despite trials, tribulations, and perturbations. The issue of India’s oil purchases has already been addressed at all levels. India must stay the course. Negotiations with patience must continue, and India should be optimistic that it will triumph. Currently, it is important to disagree without being disagreeable,” Dr Mukund added.
“Trump’s tariff tantrums, imposing 25% tariff on Indian goods and an unspecified penalty for trade in energy and defence goods with Russia was unexpected and therefore has impacted market sentiments in the short-term. The sharp appreciation in the dollar index to 100 is another negative which can impact FPI inflows in the near-term. Market perception is that after the initial chaos there will be a deal between India and US after the next round of negotiations,” said Dr VK Vijayakumar, chief investment strategist, Geojit Investments.
“Trump’s latest (Aug 4,2025) post on X that he will be substantially raising US tariff on India for buying Russian oil is indeed a big threat. If he walks his talk, the India-US relations will further strain and the impact on India’s exports to the US can be worse than thought earlier. India’s GDP growth and corporate earnings in FY26 also will be impacted. India’s response, with facts, that “targeting India is unjustified and unreasonable” sends a message that India will not be making undue concessions and compromises,” Dr VKV underlined.
The world will face a fateful decision. Of courses, President Trump’s ‘America First’ mantra is not very bad, but if all nations start thinking so aggressively, the alarming dilemma of fragmentation in economies will accelerate further.
