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Info Service on WTO and Trade Issues (Aug25/07) Trade:
Trump slaps additional 25% tariff on India for buying Russian oil Geneva, 7 Aug (D. Ravi Kanth) -- India on 6 August reiterated that United States President Donald Trump's decision to impose an additional 25% tariff on Indian goods from 27 August on extraneous national security grounds is "unfair, unjustified, and unreasonable". The 25% tariff on India announced by the Trump administration on 6 August is in addition to the earlier reciprocal tariff of 25% on Indian exports to the American market, which will come into effect on 7 August, thus raising the total tariff on Indian exports to the US to a staggering 50%. President Trump's seemingly "bullying" actions against one of the US' closest allies in Asia appear to have upended the close relations that the Indian government, led by Prime Minister Narendra Modi, sought to develop with the US President since his first term in office in 2017, said people familiar with the development. Instead of President Trump posting his decision on his Truth Social media website, the White House issued a Fact Sheet on 6 August, titled, "President Donald J. Trump Addresses Threats to the United States by the Government of the Russian Federation", explaining the underlying rationale for the latest tariff hike on India. According to the White House Fact Sheet, "Today [6 August], President Donald J. Trump signed an Executive Order imposing tariffs on India in response to its continued purchase of Russian Federation oil, and establishing a process for the potential imposition of similar tariffs on other countries that directly or indirectly import oil from the Russian Federation." President Trump's latest action is seemingly not just limited to India, in that more countries may also be hit with the unilateral US tariffs soon. It remains to be seen whether President Trump will target China, which is a major buyer of Russian oil and LNG, as well as North Korea, and other countries, said people familiar with the development. The White House has seemingly justified its unilateral decisions to impose tariffs based on controversial US legislation such as the International Emergency Economic Powers Act (IEEPA) through which reciprocal tariffs have been imposed on various countries, including India, Bangladesh, Pakistan, Indonesia, Vietnam, Malaysia, Thailand, the European Union, Japan, and Korea on condition that these countries provide full market access to US products. In addition, some of these countries are also being asked to purchase billions of dollars worth of US civil aircraft and military equipment, as well as invest hundreds of billions of dollars in setting up new manufacturing facilities in the US. These conditions being demanded by the US have never been heard of in the past 80 years of the rules-based global trade order, which, according to numerous studies by international organizations as well as academia, has benefited the US more than any other country, said people familiar with the development. On the latest US action seemingly triggered by India's purchases of Russian oil, the White House Fact Sheet gave several reasons that could hardly be justified based on current international norms. The reasons cited by the White House for its actions against India are as follows: "The President found that India is currently importing Russian Federation oil. Accordingly, to address the national emergency stemming from the Government of the Russian Federation's actions taken against Ukraine, he is imposing an additional 25% tariff on imports from India, effective August 27, due to India's direct or indirect importation of Russian Federation oil. * This tariff is in addition to any other duties, fees, taxes, exactions, and charges applicable to such imports, unless subject to existing or future actions under section 232 of the Trade Expansion Act of 1962. * This tariff is also in addition to any tariff applicable under Executive Order 14257 of April 2, 2025, as amended, but the additional 25% tariff imposed by this order shall not apply to articles set forth in Annex II to Executive Order 14257 [on reciprocal tariffs]. The Secretary of Commerce, in coordination with the Secretary of State, Secretary of the Treasury, and other senior officials, will determine whether other countries directly or indirectly import Russian Federation oil and recommend further actions to the President as needed." Under the headline "Countering the Russian Federation's threat to US national security and foreign policy", the White House Fact Sheet stated: "The Russian Federation's actions in Ukraine pose an ongoing threat to US national security and foreign policy, necessitating stronger measures to address the national emergency. * India's importation of Russian Federation oil undermines US efforts to counter Russia's harmful activities. * India's subsequent reselling of this oil on the open market, often at significant profit, further enables the Russian Federation's economy to fund its aggression. * By imposing a 25% tariff, President Trump aims to deter countries from supporting the Russian Federation's economy through oil imports and impose serious economic consequences on the Russian Federation for its ongoing aggressions." Declaring that the latest action is aimed at "Putting America First", it said that "President Trump has been consistent that he will not tolerate Russian Federation aggression." It further said: * "President Trump has been transparent that the Russian Federation would not be facing these actions if they were to "get a deal where people stop getting killed." * President Trump has also been upfront that India would face tariffs for buying Russian Federation oil: "India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits ... Because of this, I will be substantially raising the Tariff paid by India to the USA." * President Trump remains committed to pursuing peace, and these actions aim to pressure the Russian Federation toward a resolution that ends the conflict and saves lives." INDIA'S RESPONSE In a strong statement, India said "the United States has in recent days targeted India's oil imports from Russia." India stated that: "We have already made clear our position on these issues, including the fact that our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India." New Delhi said that, "It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest." The Indian statement, however, did not name the other countries that were purchasing oil from Russia. India reiterated that President Trump's actions are "unfair, unjustified and unreasonable." It vowed to "take all actions necessary to protect its national interests." Meanwhile, India's National Security Advisor, Mr Ajit Doval, was reportedly visiting Moscow on 6 August to have consultations with the Russian government, said people familiar with the development. DOWNTURN IN RELATIONS During a visit to the White House in February, Indian Prime Minister Modi reportedly declared that MAGA (Make America Great Again) plus MIGA (Make India Great Again) could translate to a Mega Partnership for Prosperity, committing to enter into an ambitious bilateral free trade agreement to increase the two-way trade between India and the US from the current level of around $180 billion to $500 billion in five years. More than five rounds of negotiations were held to arrive at an interim agreement, to be followed by a final agreement by end-October. It was to be expected that the US would be trying to pry open the Indian market for its heavily subsidized agricultural products by seeking zero tariffs for American products entering the Indian market, said people familiar with the development. An analysis by the Reuters news agency on 6 August suggested that the talks have seemingly collapsed because of the US demand for zero tariffs for both its industrial and agricultural exports to the Indian market. BRICS' RESPONSE President Trump's allegedly arbitrary and unjustifiable actions seem to be forcing members of the BRICS (Brazil, Russia, India, China, and South Africa, plus other members) to close ranks for a collective course of action against Washington, said people familiar with the development. On 6 August, Brazil's President Luiz Inacio Lula da Silva is understood to have rejected President Trump's offer to call him anytime to discuss tariffs, stating that Brasilia would instead use all available resources, including at the World Trade Organisation (WTO), to defend its interests. The bilateral relations between Brazil and the US reportedly touched a new low following the US decision to impose a 50% tariff on Brazil, over what President Trump called a "witch hunt" against former President Jair Bolsonaro, who is on trial on charges of plotting a coup following his election loss in 2022. President Lula referred to the US reciprocal tariffs as "the most regrettable" time in the bilateral history between the two countries. He said that his government was already taking action to strengthen foreign trade with other nations, including BRICS partners. "In 2025, we will resort to all possible measures, starting with the WTO, to defend our interests... In fact, the government was already taking action to strengthen foreign trade and generate new opportunities for domestic companies before the change of administration in the United States," President Lula said, speaking at an event in Brasilia. He said that he would not call President Trump to discuss tariffs because the US leader "does not want to talk", adding that, "I will call Xi Jinping, I will call Prime Minister Modi. I won't call Putin, because he can't travel now. But I will call many Presidents." +
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