India’s political opposition is furious with Hindu nationalist Prime Minister Narendra Modi for failing to secure a trade deal with the United States.
President Donald Trump increased the pressure on Modi on Wednesday by threatening to impose a 25% tariff on Indian imports, plus additional penalties if India continues to do business with Russia.
Trump wrote a provocative post on Truth Social on Thursday morning in which he criticized India’s “strenuous and obnoxious non-monetary trade barriers,” along with its sky-high tariffs on American imports.
“While India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world,” he wrote.
Trump further castigated India for buying the “vast majority of their military equipment from Russia,” and he seemed to accuse the Indians of financing the invasion of Ukraine by purchasing large quantities of Russian oil.
“All things not good!” Trump wrote to summarize his assessment of India’s trade situation.
In another Truth Social post, Trump appeared to wash his hands of India altogether.
“I don’t care what India does with Russia. They can take their dead economies down together, for all I care,” he grumbled.
The Indians were among the first of America’s trading partners to aggressively pursue a trade deal after Trump announced his “Liberation Day” tariff schedule in April. Indian officials have consistently expressed confidence that a deal would be finalized before the last of Trump’s tariff delays expired on August 1.
Treasury Secretary Scott Bessent said on Thursday that despite India’s public enthusiasm for making a deal, its trade team was actually stubborn and exasperating to deal with.
“India came to the table early. They’ve been slow rolling things. So I think that the president, the whole trade team has been frustrated with them,” he said.
“And also, you know, India has been a large buyer of sanctioned Russian oil that they then resell as refined products. So, you know, they have not been a great global actor,” he added.
In addition to the frustration Trump and Bessent expressed about India buying vast amounts of Russian oil, American negotiators have reportedly been frustrated by New Delhi’s protectionism toward Indian agriculture.
Indian Trade Minister Piyush Goyal made no secret of that protection in remarks to his parliament on Thursday, insisting the Modi administration “attaches the utmost importance to protecting and promoting the welfare of our farmers, workers, entrepreneurs, exporters, MSMEs and all sections of industry.”
MSME stands for “micro, small, and medium enterprises,” the Indian government’s catch-all term for small businesses.
“We will take all necessary steps to secure and advance our national interest,” Piyush declared.
Agriculture is a political land mine for Modi’s government, as the industry employs nearly 40 percent of the population. Indian officials have long sought to justify their naked protectionism by claiming domestically produced food has higher health and quality standards than foreign imports, so yielding on agriculture tariffs would come as a blow to national pride.
Many observers of the Indian political scene have expressed doubts that Modi’s government could survive making major concessions on agriculture. The opposition has made it clear that any move Modi makes on trade issues will be fair game for hardball politics.
“The government has destroyed our economic policy, has destroyed our defence policy, has destroyed our foreign policy,” opposition leader Rahul Gandhi declared on Thursday.
Gandhi repeated Trump’s jibe about the Indian economy being “dead,” and said he was grateful to Trump for stating an uncomfortable “fact.”
“The external affairs minister gives a speech in which he says we have a genius foreign policy. On the one hand, the U.S. is abusing you, and on the other hand, China is after you,” Gandhi said. “And when you send delegations across the globe, no country condemns Pakistan. How are they running the country? They don’t know how to run the country.”
The opposition leader’s remark about Pakistan referred to the Modi government’s largely unsuccessful attempt to get world leaders to denounce the government in Islamabad for sheltering terrorists, such as the killers who massacred tourists in Kashmir in April, bringing India and Pakistan to the brink of war.
This prompted an angry rebuttal from Modi’s BJP party, which accused Gandhi of parroting “foreign propaganda.”
“Rahul Gandhi has hit a new low by echoing the ‘dead economy’ jibe – a shameful insult to the aspirations, achievements, and well-being of the Indian people,” BJP information technology leader Amit Malviya said.
“Even amidst global slowdown, India remains the world’s fastest-growing major economy, with the International Monetary Fund (IMF) and World Bank revising growth projections upwards,” Malviya added. “Yet, Rahul Gandhi chooses to ignore this – because facts shatter his hollow narrative.”
Gandhi faced some pushback from within his own Congress Party, as some members of the opposition were uncomfortable with Trump’s harsh assessment of the Indian economy.
“Our economic condition is not at all weak. If someone claims they can finish us economically, it’s likely due to a misunderstanding. Trump is living in a delusion,” said Congress lawmaker Rajeev Shukla.
“Indian economy is in the top 5 of the world and one of the fastest-growing economies. Calling it a dead economy can only come from a position of arrogance or ignorance,” said another opposition MP, Priyanka Chaturvedi.
Analysts told Reuters on Thursday that Indian politicians would be making a grave mistake by underestimating the impact of Trump’s tariffs, which could be devastating for India’s exports, especially if India winds up paying a higher tariff rate than Asian competitors for U.S. business. The worst-case projections saw India losing 40 basis points from its economic growth by the end of next year.
Pakistan reportedly reached a trade deal with the United States on Thursday, which will probably increase the pressure on Modi and further enrage his opponents.
The Pakistani Finance Ministry said the deal would include “reduction of reciprocal tariffs,” although no specific rates were cited in the initial announcement. President Trump said Pakistan and the United States would “work together on developing their massive oil reserves,” in a partnership to be coordinated by an as-yet unnamed American oil company.
“This deal marks the beginning of a new era of economic collaboration especially in energy, mines and minerals, IT, cryptocurrency and other sectors,” the Pakistani Finance Ministry said.
India’s only route back into Trump’s good graces might be giving up on Russian oil. Defunding Russia’s war in Ukraine is a priority so high that the Trump administration might be willing to make significant concessions to achieve it.
The Economic Times of India reported on Thursday that Indian state refiners stopped buying Russian oil last week, in part because the discounts offered by Russia were getting smaller, but also because Trump and North Atlantic Treaty Organization (NATO) chief Mark Rutte warned India and its colleagues in the BRICS economic bloc that they could face painful secondary sanctions for doing further business with Russia.
India’s private refineries are actually bigger customers for Russian oil than the state-owned operations, so India hardly went cold turkey last week – but New Delhi might have been trying to show that it could dramatically reduce its purchases of Russian crude, if properly motivated.
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