DC Edit | Trump Tariffs Make Oil Choices Hard For India
India upped its buying of American light crude by 50 per cent between January and June. But it also corrected a Trump misconception about the nation having stopped buying Russian crude
Global trade is at the US President Donald Trump’s mercy. While some nations are rejoicing at getting away more lightly, others are fretting. Especially India which finds itself wedged between a rock and a hard place. The rock is, of course, the US President who seems to have taken a fancy to Pakistan as did Richard Nixon, his long-ago Republican predecessor. The hard place is the necessity to change the oil import strategy which was hit by Trump’s tariff tantrums throwing India out of its comfort zone.
India has very difficult choices to make in the next couple of weeks before negotiations with a US team in New Delhi. It has already sent a stern political message that it will not kowtow to Trump’s tactics of stopping India from buying discounted Russian crude. Without equivocation it has been stated that some Russian supply will be bought depending on pricing even if buying may have been halted temporarily.
India upped its buying of American light crude by 50 per cent between January and June. But it also corrected a Trump misconception about the nation having stopped buying Russian crude. This was the first defiant note that was communicated with the Prime Minister saying in his Varanasi speech that India will have to stay alert as far as its economic interests are concerned as it is on course to becoming the third biggest global economy.
It is a no consolation that Trump’s tariff tactics are not meeting all their desired objectives. The first signs of dwindling jobs, because of which Trump shot the messenger as he fired the data manager, rising inflation due to which the Federal Reserve chair refused to reduce interest rates, much to the president’s ire, and slowing growth are displaying just what Trump may not have ordered for the American economy. And that is beginning to show as his disapproval ratings as President climb.
It has been pointed out that Trump may be mistaken in believing that steep universal tariffs on imported goods will be picked up by the exporting countries whereas it is the American consumer who will end up paying more for those products. This is a major mistake, according to former President Joe Biden who has been finding voice lately about the dangers of the Trump regime not only to global trade with America but also to the institutions of democracy.
However, all those matters are America’s concern far more than India’s. It has been computed that the 25 per cent tariff on goods that are not exempted may cost the nation at least $7 billion while stopping Russian crude imports may cost about $9 bn. Buying American light crude would be one way of helping reduce the trade surplus, about $44 bn last year, that Trump has been eyeing and making it one of the excuses to keep India on the 25 per cent bracket, while the rate for Pakistan (19 per cent) and Bangladesh (20 per cent) have been lowered.
The matter of giving up Russian crude and sourcing elsewhere may entail additional logistical costs, besides reflecting on India’s inflation if Trump goes the whole hog and charges 100 per cent penalty for buying Russian oil and weapons. This is not pure economics anymore as global trade hangs on every Trump word and Truth Social post. There is a political decision to be taken — either to genuflect before a maddeningly mercurial and wildly whimsical Trump or to stand up and say that the interests of India’s 700 million farmers come first.
