India has also replied to the US that it will not compromise on any issue for the benefit of its country and people. Prime Minister Modi argues that since America itself is doing business with Russia, it cannot put such pressure on other countries.
What you should know
When Indian Prime Minister Narendra Modi is going to visit China after seven years, the world political scene is not normal for India. Modi is going to China at a time when India's relations with the US have reached a tense state. He is going to China to attend the Shanghai Cooperation Organization Conference on August 31.
Modi's visit to China, which is coming at a time when US President Donald Trump is announcing a 50 percent tariff on Indian goods entering the US, is seen as meaningful. The Indian media claims that Modi's visit will play a role in easing relations that have deteriorated after the deadly clash between the Chinese and Indian forces in the Galwan Valley in 2020, which resulted in restrictions on each other's goods and services.
America accuses India of helping the Russia-Ukraine war by importing petroleum products from Russia. On Wednesday, Trump raised the tariff rate on Indian goods to 50 percent, saying that India continued to buy oil despite their clear objections. "The Economic Times" has reported that the analysis of Indian economists may cause a contraction of 1 percent in India's gross domestic product (GDP) due to this announcement.
Trump has given another warning to impose further sanctions if India does not stop buying Russian oil. He seems to be getting aggressive towards India day by day. Quoting Trump, the statement released by the White House said, "India is not only buying large quantities of Russian oil, it is also making huge profits by selling a large part of that oil in the open market." Therefore, I will significantly increase the customs duty that India pays to the US.' Indian businessmen told CNBC that 20 percent of India's goods or 2 percent of GDP are exported to the US and now there may be significant problems in mutual trade related to precious stones, jewelry, clothing, textiles and chemicals.
The White House said that the 25 percent tax announced by Trump before this Thursday and the additional 25 percent tax announced on Wednesday will be implemented after 21 days. Since the information technology sector is not included in this, it seems that there will not be any significant impact on the service, which has a 9 percent direct impact on the American market. This leaves semiconductor and electronic products untouched by reactive tariffs. Similarly, there is no customs duty on pharmaceutical products from India to the US. Even though India exports steel and aluminum to the US, it will not have to pay 50 percent duty as these items are taxed through a separate executive order.
Why did Trump impose 50 percent customs?
In the last few days, India and the US have come face to face over the purchase of Russian fuel. India has responded that the US and European allegations that India is supporting the Ukraine war by importing petroleum products from Russia are irrational. Trump, speaking to the media on Wednesday, responded that the announcement was just the beginning and that there are many more sanctions and punishments to come. Trump's answer to the journalist's question about why India was singled out among the countries that import Russian oil was, "It's only been eight hours now, let's see what happens."
The relationship between Trump and India began to sour since India refused to formally accept the matter that he had mediated to prevent a war with Pakistan. Trump, who did not impose additional tariffs on Russia in the hope of getting Russia to cease war with Ukraine at the initial stage, has also started digging on Russia after his efforts failed. After the Israel-Iran tension and Russia's one-sided Ukraine policy, Trump has adopted a strategy to put pressure on the countries that buy fuel from Russia and Iran by promoting issues related to customs tariffs and trade agreements.
Even after India's participation with countries like Brazil, South Africa, and Russia, which Trump criticizes along with China, which has clearly stood with Pakistan in the recent war, Trump has been openly criticizing it. He has publicly warned the BRICS countries to impose additional tariffs and is continuing to try to reach a trade agreement with China.
India has strongly denied the US allegations. The spokesperson of the Ministry of Foreign Affairs of India has said, "Those countries that are criticizing us are themselves doing significant business with Russia." But for us, this trade is to meet the needs including basic energy. The spokesperson of the ministry reiterated that the European Union's trade with Russia in 2024 is much higher than that of India, and the American move to isolate only India is 'unfair and irrational'.
India's Energy Minister Hardeep Singh Puri said in an interview with CNBC, "When the Russia-Ukraine war started, it was America who suggested India to buy Russian oil." If they had stopped buying oil at that time, the price of oil would have reached $130 per barrel.'
India exported goods worth about $81 billion to the US in 2024. It is estimated that about $64 billion worth of trade could be put at risk by Trump's crackdown. However, the Reserve Bank of India (RBI) has indicated that the impact of the latest challenge will be limited, sticking to its previous economic growth forecast. Diplomatic influence is estimated to be deeper than economic. Modi's visit to China is seen as a clear message to Washington. "India has been trying to maintain a multilateral balance according to its needs without taking sides in the diplomatic field," said Rachel Zimba, a senior analyst at the American think tank Center for a New American Security.
losing influence in Asia
America's most reliable friend in South Asia is India. But because of Trump, the US is sure to distance itself from this friend. America's main competitor in global economic or military power is China. On the other hand, China's competitor in South Asia is India. US projects have so far been implemented in South Asian countries via India. But now, due to Trump's trade war, this effect seems to be decreasing.
China has already repeatedly warned that it is ready for any kind of war. Meanwhile, India has also replied to the US that it will not compromise on any issue for the benefit of its country and people. Prime Minister Modi has also said in various forums that he will not make any deal as such US policy is irrational. Moreover, he argues that since America itself is doing business with Russia, it cannot put such pressure on other countries.
Indian Prime Minister Modi is going to China amidst this controversy. Well China and India are competing countries. But so are neighbors. Another reason is that both countries are currently being targeted by US tax policies. Modi's visit to China for the first time since the Galwan conflict of 2020 has also been linked to Trump's policy. Modi is also seen as choosing to visit China to counter Trump's continued pressure on India. Modi is going to visit China from August 31 to September 1 to participate in the prestigious Shanghai Cooperation Organization (SCO) summit to be held in China.
It remains as a strong regional international organization. It includes China, Russia, Iran, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Pakistan and Belarus along with India. Many have discussed this conference as a special opportunity to increase pressure on Trump's policies.
In the midst of the tax policy controversy, the Russian President Vladimir Putin will also visit India. India's National Security Adviser Ajit Doval while talking to the Indian media said that Putin will visit India soon. While the US is increasing pressure on the purchase of Russian oil, the visit of the Russian president will definitely increase the pressure on the US.
