India In The Line of Fire as Trump Targets BRICS With Tariff Threats

In the initial days of his presidency and during his last presidency, China was at the receiving end of Trump’s ire. In February, the US started with an additional tariff of 10 per cent on China in the first week of February and scaled up to 145 per cent by May. China’s retaliatory tariffs also had reached 125 per cent by May. When China curbed the exports of rare earth magnets used in electric vehicles, electronics, and defence equipment, both countries made a truce for 90 days for negotiations till August 12 and brought down the tariffs.

In April, when the US announced reciprocal tariffs on all trading partners, India was in a better place compared to Asian peers with a 26 per cent tariff. India was the first to start trade talks with the US as well.

Several other countries also initiated trade talks with the US during the 90 days set for the implementation of reciprocal tariffs.

Meanwhile, Trump started linking political issues to economic policy and tariffs. Irked by the BRICS summit and the ongoing efforts to de-dollarize the globe, Trump announced that the US would impose an additional 10 per cent tariff on “any country aligning themselves with the Anti-American policies of BRICS” with “no exceptions”. The BRICS countries, including India, had released a joint declaration voicing “serious concerns” about the “rise of unilateral tariff and non-tariff measures” in an apparent jibe at the Trump administration’s trade policy.

Trump also threatened to impose a 500 per cent tariff on countries buying oil from Russia.

During the 90-day period, Trump managed to announce deals with the US, European Union, Indonesia, Vietnam, Japan, Philippines and South Korea and a framework agreement with China.

The trade talks with India remain inconclusive with no agreement on some of the sticky points, including the opening of agricultural markets, dairy imports, and GM feed. Before the August 1 deadline, when Trump announced the new tariffs for the trading partners, India lost the tariff advantage it had earlier with Asian peers. While almost all of them, except Myanmar, were in the 15 to 20 per cent bracket, India, facing a 25 per cent tariff and a threat of penalty for buying oil and defence equipment from Russia, was among the countries in the high-tariff bracket.

Trump continued his tirade over India’s relationship with Russia and purchase of oil over social media, though China remains the largest buyer of Russian oil. This time, however, India chose to put its feet down with a hard-hitting response.

Rejecting “unjustified and unreasonable" pressure from Western powers, India stated that it turned to Russia for energy needs when its traditional suppliers shifted their focus to meet Europe's demand. It also stated that the US was buying uranium and fertilizers from Russia.

On Wednesday, the executive order of the White House imposed an additional 25 per cent tariff on Indian goods, applicable 21 days after the order. Steel, aluminium and derivatives, automobiles and auto parts, copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products are exempted from the additional tariff.

Brazilian goods are also facing a 50 per cent US tariff from August 7 for the criminal prosecution of former President Jair Bolsonaro. The Brazilian President said that he will not engage directly with Donald Trump but seek recourse through the World Trade Organization (WTO) and other available channels to defend its trade interests. He also mentioned talking to China and India and heads of other countries.

While the US had earlier imposed economic sanctions on Russia, Trump has threatened to impose additional sanctions on Russia’s “shadow fleet” of oil tankers. Russia also accused the US of pursuing a “neo-colonial agenda” and stated that it has the support of BRICS members.