India's 'trade war' with the US has begun. The 50 per cent US tariff on Indian goods came into effect from today with exporters staring at the possibility of huge losses. Prime Minister Narendra Modi has promised that MSMEs and farmers will not have to face losses due to a decline in exports. The US accounted for nearly 20 per cent of India's $437.42 billion worth of goods exports in 2024-25. In 2024-25, India-US bilateral trade in goods stood at $131.8 billion. India exported $86.5 billion worth goods to the US and imported $45.3 million worth of goods from the US. Textiles/ clothing, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and electrical and mechanical machinery exporters will face huge losses due to steep US tariff, making their goods costlier. Pharmaceuticals, steel, copper and aluminium, energy products and electronic goods have been kept out of the ambit of 50 pc tariff. US President Donald Trump had imposed 25 pc tariff on Indian goods on July 29, and followed it up by slapping additional 25 pc tariff on August 6 alleging that India was importing Russian crude.
The new US tariff will affect 66 per cent of India’s exported products. The steep 50 pc tariff on Indian goods will impact exports worth more than $48 billion. India’s Commerce Ministry officials will be meeting exporters of chemicals, gems and jewellery in the next 2-3 days to discuss diversification of exports. Experts say, farmers, MSMEs & exporters will have to bear the brunt of the steep US tariff. Textile exports from Thiruppur, Surat and Noida may face five lakh job losses, while gems & jewellery sector may lose two lakh jobs. The livelihoods of 30 lakh Andhra Pradesh shrimp farmers are at grave risk, says Congress MP Manickam Tagore.
Prime Minister Modi has time and again made it quite clear that India will not succumb to any pressure. The US has been demanding that India should open up its agriculture and dairy sectors to American exporters, but India has stood its ground. Modi has said that self-reliance (atmanirbharta) is the only solution. Agriculture Minister Shivraj Singh Chouhan has said that the US, being the world’s biggest economy, is engaged in ‘dadagiri’ by slapping steep tariff. Chouhan said, this is the New India and "We are neither going to be afraid nor will bow down to any pressure”. The world accepts that Donald Trump’s steep tariff on India is unfair. Trump has also treated other friendly nations in a hostile manner. The world has taken notice. It is a fact that most of the countries succumbed to Trump’s pressure tactics but India refused to bow. Trump tried his level best to browbeat India, but Modi refused to surrender. The world has noticed this.
Thirdly, Trump tried to browbeat China by threatening to impose a 200 pc tariff, but China is not America’s ally. China also buys crude from Russia, but Trump never made it a big issue with China. He did not dare to slap high tariff. China is a huge market for the US. This is clearly an example for Trump’s double standards. I think India should bear patience and work cleverly in this crucial hour of the test. Prime Minister Modi is adept at turning crisis into opportunity. We should trust Modi. He is surely going to convert the crisis created by Trump’s tariff into an opportunity.
Maybe, India will have to face problems for a year or two, and the growth rate of the economy may marginally decline, but India’s economy today is resilient. It can withstand pressures. The crisis during Covid pandemic is an example. India converted that crisis into an opportunity. In 1998, the US imposed trade sanctions on India after the nuclear tests. At that time, our economy was not so strong as it is today. India is the world’s fourth largest economy now and export of goods to the US account for only two per cent of our GDP. So, there is no reason to be worried. India’s domestic market is the powerhouse of our economy. For the US, India is a huge market. If India faces losses due to tariffs, the US will also lose one of the biggest markets of the world.
In India, we have a saying, ‘Jo Hota Hai, Acche Ke Liye Hota Hai’ (Whatever happens, is for the good). If America blocks our path, there are other markets which will open up for India. Because of Trump’s policies, India, Russia and China have come closer. These three countries account for 38 per cent of the world population. India, Russia and China control more than 30 per cent of the market in the sectors of textiles, pharmaceuticals, engineering goods, steel and marine products. If these three nations join hands, the US can be sidelined and American arrogance will bite the dust.
World watches when Modi, Putin, Xi Jinping meet
US President Donald Trump understands the consequences of India, China and Russia coming together. This is the reason why he is following a ‘blow hot, blow cold’ policy towards China. On India, Trump has claimed for the umpteenth time that he threatened to impose huge tariffs if India and Pakistan do not agree to a ceasefire. On Tuesday, Trump made another claim that seven fighter jets were downed during the India-Pakistan four days’ conflict. There is no guarantee what Trump will say, when and where, as far as claiming credit is concerned. First, he said, three fighter jets were downed, then he said, six fighter jets were downed, and on Monday, he said, seven fighter jets were downed.
Trump’s remarks of this nature will continue, but India’s Chief of Defence Staff Gen Anil Chauhan on Tuesday gave a veiled warning to Pakistan, saying it should not forget the beating that it got during Operation Sindoor. Gen. Chauhan said, India's peace-loving stance should not be mistaken for weakness. "We are a peace-loving nation, but don't get mistaken, we cannot be pacifists. Peace without power is utopian… If you want peace, prepare for war." The Chief of Defence Staff said, “As a Viksit Bharat, we also need to be ‘Sashastra’ (armed), ‘Suraksit’ (secure) and ‘Aatmanirbhar’ (self-reliant), not only in technology, but also in ideas and in practice.”
The CDS said: "... Two or three days back, you would have heard about DRDO testing a particular integrated system in which there were QRSAM, VSHORADS and 5-kilowatt lasers, they were all getting combined into one. We'll have to look at multi-domain ISR, integration of ground, air, maritime, undersea, space, sensors, all becoming a key necessity and integrating them. A colossal amount of integration will be required, as multiple fields will need to be networked to provide a very fused picture to us. Colossal amounts of data will be needed to be analysed for information in real-time response. Use of artificial intelligence, advanced computation, data analytics, big data, LLM, and quantum technologies will be essential. For a vast country like India, a project of this magnitude will require a whole-of-nation approach. But like always, I am very sure Indians will do it at a minimal and very affordable cost to us."
On Tuesday, the Indian Navy commissioned two stealth frigates INS Udaygiri and INS Himgiri at its Vishakapatnam naval base. INS Udaygiri was developed by Mumbai’s Mazgaon shipyard, while INS Himgiri has been made by Kolkata’s Garden Reach Shipbuilders. The frigates have been designed so that they can evade radar, infrared red and sound sensors. Nearly 75 per cent of the indigenous equipment have been installed in these frigates. Both warships will now be deployed in the Indian Ocean as part of the Indian Navy’s eastern fleet. India’s self-reliance in the field of defence is Modi’s reply to Trump.
On Tuesday, the German newspaper Frankfurter Allgemeine Zeitung reported that President Trump tried to talk to PM Modi at least four times in recent weeks on the issue of tariff, but Modi refused to talk. Though it is difficult to establish the veracity of this news report, it clearly indicates how those in the West including Germany are discussing about Trump’s tariff. The newspaper report says, “ the fact that the Indian leader still refuses to talk demonstrates not only the depth of his anger, but also his caution". The report said, “Without reaching an agreement, Trump announced on social media that a trade deal had been struck. Modi doesn’t want to fall into the same trap." Analysts in the West feel that it is Modi who can stand up to Trump’s belligerence. What Modi may do, can be known more from his actions rather than his talk.
Prime Minister Modi will be in Japan on August 28, and three days later, on August 31, he will be in Tianjing, China, to attend the SCO summit. Modi is going to meet Chinese President Xi Jinping and Russian President Vladimir Putin. This is enough to indicate that the world order can undergo a change by next week. The eyes of the world will be fixed on this meeting.
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