WASHINGTON/NEW DELHI, Aug 8: After imposing a staggering 50 per cent duty on Indian goods, US President Donald Trump has also ruled out any trade talks between the two countries until the tariff issue is resolved.
“No, not until we get it resolved,” Trump said in the Oval Office on Thursday in response to a question on whether he expects more trade negotiations with India after doubling the tariffs on Indian imports to 50 per cent.
A prominent American Congressman Representative Gregory Meeks, a Democrat, meanwhile, said Trump’s latest ‘tariff tantrum’ risks years of careful work to build a stronger US-India partnership.
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Over the last few months, India and the US have held several rounds of negotiations for a bilateral trade deal, but it could not be sealed in view of sharp divergences in certain critical areas, including agriculture and dairy.
The next round of bilateral talks for an initial trade agreement was scheduled to be held in August 25 in New Delhi, two days before the 25 per cent penalty on India, which is on top of a 25 per cent tariff, for continued purchase of Russian oil kicks in.
As India explored various options to deal with Trump’s action, Commerce and Industry Minister Piyush Goyal said the world today recognises the strengths of India and its demographic advantages.
“1.4 billion people bring aggregate demand, huge domestic market …why else do you think everybody is vying up to do trade or have a better market access,” he told the Business Today India@100 event in Delhi on Friday.
Speaking at the same event, former G20 Sherpa Amitabh Kant said India should never lose its strategic autonomy and never yield to pressure while negotiating trade deals with the US, suggesting at the same time that the country should look at a long term perspective and behave in a calm and collected manner.
India should use trade-related uncertainties as an unique opportunity to carry out very vigorous reforms in our economy, he said.
“We still have 20 days for these (US) tariffs to kick in.We should never yield to pressure, but we should negotiate in a very rational manner, in a sensible manner, and I think there is plenty of time to be able to arrive at an agreement.”
The 16th Finance Commission Chairman Arvind Panagariya told the same event that India faces a pivotal moment in the current geopolitical order of higher tariffs on exports and the country should now push the pedal on its reform agenda.
“At this pivotal moment we should aggressively pursue the Free Trade Agreement with the European Union. That is very, very important. As one market seems to be kind of closing, we need to open wider another market… EU agreement needs to be done and then there are reforms that need to be done particularly with labour market and land market.”
Panagriya also dismissed Trump’s “dead economy” jibe at India, saying the Indian economy is growing at 7 per cent and more than that in dollar terms. “May be, dead bodies do move.”
“You don’t grow at 7 per cent plus (if the economy is dead), and actually in dollar terms we are growing at more than 7 per cent. I don’t know what the definition (of dead economy) means. May be, dead bodies do move,” he said when asked if India is a ‘dead economy’.
Mounting a sharp attack on India, Trump had remarked that India is a “dead economy”.
“I don’t care what India does with Russia. They can take their dead economies down together, for all I care,” Trump had said in a social media post on August 3.
US Representative Meeks said the US has “deep strategic, economic, and people-to-people ties” with India.
“Trump’s latest tariff tantrum risks years of careful work to build a stronger US-India partnership,” he said in a post on X.
“Concerns should be addressed in a mutually respectful way consistent with our democratic values.”
Kerala Finance Minister K N Balagopal said the 50 per cent tariff decision on Indian goods was a “bullying tactic” to control the country’s economy.
The minister said the US was trying to bully India into accepting more imports from America as “our purchasing power has increased manifold”.
“Therefore, it is a time when all should stand united to safeguard India’s interests and oppose such moves which can harm the Indian economy,” he told reporters in Thiruvananthapuram.
Moody’s Ratings said India’s GDP growth is likely to slow down by about 30 basis points to 6 per cent in the current fiscal if the US implements the total 50 per cent tariffs from August 27.
However, resilient domestic demand and the strength of the services sector will mitigate the strain on India, Moody’s said, adding that India’s response to high US tariffs will ultimately determine the effect on its growth, inflation and external position. (PTI)
