Trump hit India with an additional 25 per cent tariff over its purchases of Russian oil, raising the total tariff on Indian imports to the US to 50 per cent – among the highest rates imposed by Washington. The new rate came into effect on Aug 27.
“India and the US built ties for a long time,” Ranjan said. “(And then) Trump imposed 50 per cent tariffs – which is not what you’d expect from a friend.”
“This (puts) the Indian economy in a very difficult position and pushes India to warm up ties with China,” he said. “It’s an imbalance created by tariffs.”
In the business world, rising US tariffs on Indian exports have increased costs and created uncertainty, making some companies cautious about relying too heavily on that market, noted Vijayaram of Portcity Impex.
“Businesses see the US as a valuable but increasingly costly market, while China, despite political tensions, continues to be viewed as a dependable manufacturing hub,” he said.
“On the other hand, China still offers scale, competitive pricing, and fast delivery that few other countries can match, even though politics make it sensitive,” he said, adding that many businesses are also “actively exploring alternatives in Vietnam, Indonesia, and domestic sourcing to avoid putting all their eggs in one basket”.
Many of his peers, Vijayaram noted, take a hedged approach: “use China for efficiency, the US for opportunity, and diversify to manage risks”.
But Kewalramani warned against overstating Washington’s role in bringing China and India closer together. “I don’t think (the warming ties) are necessarily driven by Trump’s policies,” he said.
“The US still remains one of India’s most important partners. At the same time, China is a geographical neighbour, it is one of India’s largest trading partners.”
“It is a reality that we live with, and we have lived with each other for thousands of years. So until the earth and tectonic plates shift, India and China will remain neighbours. So we have to find a way for each other to get along,” he added.
India-China bilateral trade dipped from US$92.8 billion in 2019 to US$87.6 billion in 2020.
But it recovered strongly to US$125.6 billion the next year and has remained robust since, hitting US$138.5 billion last year.
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