New Delhi: US President Donald Trump declared he was hiking tariffs “very substantially” beyond the stipulated 25% over the next 24 hours. Speaking to CNBC on Tuesday the president described India as the “highest tariffs nation” in the world that continued to “fuel the war machine” in Russia.
US President Donald Trump's Statement
“We settled on 25% but I think I’m going to raise that very substantially over the next 24 hours because they’re buying Russian oil, they’re fuelling the war machine.” The US president had earlier announced that 25% tariffs would be levied on Indian goods and services if India did not break away from buying Russian oil. The deadline was August 7. When asked about the trade deal with India that seemed imminent, Trump said the "sticking point" with India is that its tariffs are too high. "Now I will say this, India went from the highest tariffs ever, they will give us zero tariffs..But that's not good enough, because of what they're doing with oil."
The president also dealt a blow to another key sector, the pharmaceutical industry. Trump announced that he would be putting a “small tariff” on pharmaceutical imports that would then increase to 150% and then 250% over the next one and a half years. “We will initially be putting a small tariff on pharmaceuticals. But in one year, one and a half years maximum, it’s going to go to 150% and then it’s going to 250% because we want pharmaceuticals made in our country.
Trump’s tariffs will deal a big blow to India’s pharma industry. Figures show India's pharmaceutical exports to the US are valued at approximately $9 billion to $10.5 billion annually. This makes the US the largest destination for India’s pharmaceutical exports, accounting for over 31% of the country’s total pharmaceutical exports. The proposed tariffs will hurt the Indian pharmaceutical industry which industry reports say employs over 2.7 million people. But it will also hurt the US. Currently, the US is dependent on India to make active pharmaceutical ingredients (APIs) and certain drugs that are more costly to make in the US.
Experts say that the imposition of the tariffs will hurt both India and the US, as there is likely to be short-term volatility as Indian pharmaceutical companies seek to diversify into other markets such as Europe and South Asia. Namit Joshi, chairman of Pharmexcil (Pharmaceuticals Export Promotion Council of India) believes it could take as much as three to five years. President Trump had attacked India over the recent days for its buying of Russian oil through posts on his Truth Social platform. His recent remarks come after New Delhi responded on Monday.
MEA Spokesperson Randhir Jaiswal's Statement
MEA spokesperson Randhir Jaiswal said that New Delhi continued to be “targeted by the United States and the European Union for importing oil from Russia after the commencement of the Ukraine conflict.” Senior diplomats believe Washington’s behaviour has left New Delhi with little choice but to abandon the diplomatic tightrope that it had been walking so far between Russia and the US.
Former Foreign Secretary Kanwal Sibal's Statement
Former foreign secretary Kanwal Sibal said New Delhi would not “cow down to threats,” and added that an interim deal had been in the works between the two sides.
“Trump has rejected an interim deal worked out by his negotiators who thought it was a good one, with India making major offers. He wants a one-sided deal as with Japan and the EU about which he can preen about publicly,” said Sibal.
“What has tariffs got to do with India buying oil and defence equipment from Russia? India already buys defence equipment and LNG from the US. He is leveraging tariff threats to control our foreign policy.” Sibal added. South Asia expert and non-resident senior fellow at the Asia Pacific Foundation, Michael Kugelman, agreed.
“Trump also wants India to buy (even) more (and pricier) American oil. In 2021, before Russia’s invasion of Ukraine, India was actually the top destination for American oil. India ramped up Russian oil imports post-invasion,” he wrote on X.
