As geopolitical trolling goes, India’s Narendra Modi suddenly heading to China for the first time in seven years is just elite.
No one could possibly miss the Donald Trump of it all as Prime Minister Modi shifts into economic-emergency mode. This follows Trump imposing a 50% tariff on India, making it the second member of the BRICS — Brazil, Russia, India, China, South Africa — to suffer a US penalty of that magnitude.
First, it was Brazil, ostensibly for holding former President Jair Bolsonaro accountable for a 2022 coup attempt. South Africa, meanwhile, is being hit by a 30% Trump tax, the highest rate in all of sub-Saharan Africa. Nigeria, Ghana, Lesotho and Zimbabwe all face just a 15% tariff.
Now, as India faces its own 50% tariff reckoning, Modi is opting to fly to Beijing instead of Washington. Modi plans to attend the multilateral Shanghai Cooperation Organization that begins on August 31.
Trump, of course, is threatening an additional 10% tax on the BRICS. Among other reasons, Trump is irked that BRICS members are angling to replace the dollar as the world’s reserve currency. He accuses the bloc of “aligning themselves with anti-American policies.”
For Modi’s unbalanced economy, say economists at Nomura Holdings, a 50% tariff is essentially a “trade embargo” against the world’s biggest democracy, long a vital counterweight against China’s regional ambitions. And, oddly, it’s over Russia, a nation for which Trump, until very recently, had a well-known affinity.
As Trump comes to realize Vladimir Putin is thumbing his nose at his White House, the US president is turning on Moscow. At least for the moment. For now, Trump World is retaliating against India for helping itself to supertanker after supertanker of cheap, sanctioned Russian oil. India buys an estimated $275 billion of annual oil purchases from Moscow.
“If the extra 25% tariff that President Trump has announced on imports from India remains in place, India’s attractiveness as an emerging manufacturing hub will be hugely undermined,” says economist Shilan Shah at Capital Economics. A 50% tax, Shah adds, is “large enough to have a material impact.”
As such, India, the globe’s fifth-largest economy, is bracing for a turbulent ride. Trump’s economy is New Delhi’s largest trading partner. In 2024, India shipped $87.4 billion of goods to the US.
Some parts of Modi’s economy are more exposed to Trump’s tariff rage than others.
“In terms of sectors impacted, we think gems and jewellery, apparel, textiles, and other chemicals are more exposed to the US tariffs and could see some targeted support measures from the government,” says UBS economist Tanvee Gupta Jain.
Rajat Agarwal, a strategist at Societe Generale, says “the impact of tariffs for equities has fed through mainly via a weaker Indian rupee and higher currency volatility, which has weighed on foreign flows in the near term.”
Trump turning on India could be remembered as the moment his trade war jumped the shark. While Modi and Xi Jinping compare notes in Beijing, the Chinese leader will have additional incentives to say no to a “grand bargain” trade deal with Trump.
The weeks since Trump struck tariff deals with Japan, the European Union and others have been rich with news cycles about confusion over what was — and wasn’t — agreed to. Since the pact with Japan on July 22, both sides have been at odds about the rules of the road concerning the 15% tariff, particularly the treatment of autos.
Richard Katz, who publishes the Japan Economy Watch newsletter, notes that is getting an earful from Detroit. Ford, General Motors and Stellantis complain that Trump’s agreement with Japan and Europe puts them at a disadvantage.
“They have to pay a 25% tariff on automotive imports from Canada and Mexico, while Japanese and European vehicles and parts can come in at 15%. But the issue is a bit more complex,” Katz explains.
On all imports from Mexico and Canada, except for autos, the tariffs on imports from Canada and Mexico apply only to goods that do not comply with the North American content rules of origin under the US-Mexico-Canada Agreement (USMCA), e.g., 75% for most products, Katz notes.
For products that do comply, the tariffs will apply to that portion of content that does not comply, e.g. 20%. However, when it comes to automotive products, the 25% tariff applies to the non-US content, not the non-USMCA content.
Over in Brussels, meanwhile, EU officials are doing damage control over the $750 billion of oil and gas Trump demands Europe buy from the US in short order. European Commission President Ursula von der Leyen makes it clear the EU can’t compel private companies to gorge on US energy for political ends.
Back in New Delhi, Modi is reassuring farmers, a key political constituency, that he won’t sell them out to Washington. Speaking at an agricultural sector conference in the Indian capital this week, Modi said he “will never compromise on the interests of farmers, livestock owners and fishermen. I know, personally, I’ll have to pay a heavy price — but I am ready for it.”
Other industries are raising red flags, too. The nation’s Gem and Jewellery Export Promotion Council termed Trump’s tariff escalation a “deeply concerning development.” The group says “this move would have far-reaching repercussions across India’s economy — disrupting critical supply chains, stalling exports and threatening thousands of livelihoods. We ask the government for immediate relief.”
Billionaire Anand Mahindra, chair of India’s sprawling Mahindra Group, warns of the economic risks of the “law of unintended consequences,” calling on Team Modi to “radically improve ease of doing business.” As Mahindra wrote on social media: “We cannot fault others for putting their nations first, but we should be moved to make our own nation greater than ever.”
Not everyone is panicking over Trump’s India tariffs. Economists at Barclays write that it “will likely inflict more visible economic damage on India but, as we have noted previously, the relatively domestic orientation of the Indian economy should limit the pain.”
Yet Morgan Stanley economist Bani Gambhir says that if implemented, Trump’s tariff would likely have the Reserve Bank of India stepping up efforts to boost growth. Gambhir expects the RBI to announce two quarter points each – on top of the 25 basis points of easing already factored in. The government, meanwhile, is almost certain to pause fiscal consolidation efforts to support domestic demand.
Trump’s own goal with India is dawning on BRICS members. Last month, the bloc met in Rio de Janeiro to discuss turning its goal of a currency to rival the dollar into a reality – and to argue for greater representation at the International Monetary Fund and World Bank. That seemed nearly impossible with India and China at odds with each other.
As Moody’s Analytics economist Sarah Tan puts it: “With two uneasy bedfellows – China and India – in its ranks, it is difficult for BRICS to turn its goal of a currency to rival the US dollar into a reality. Adding pressure from afar, Trump promised an extra 10% US tariff to countries that align with “the anti-American policies’ of BRICS.”
Now that Trump is pushing India and China into each other’s arms, the dynamic could change rapidly in ways that may surprise Washington and the world.
Follow William Pesek on X at @WilliamPesek
china doesnt trust or want modi and modi only has himself to blame …
That’s ironic, India cozying up to China.
Unlikely Tiddly Tang. They both hate each other.
Modi on his knees.
The US is like an abusive husband who after his wife already initiates divorce proceedings, threatens her to stay or else. Her, knowing kung fu better than her husband, smiles and says to herself: “I can endure pain today for less pain tomorrow”. BRICS knows the US will lash out in fury as the Global South refuses to bow down, but the US will become less relevant in their futures ad they know it.
It’s just a shame Aisha couldn’t initiate divorce proceedings against the pedoprofit
🤣🤣🤣🍦🌮🎪🤡🌏‼️😁😁😁
Trump has turned the US into North Korea. His policies are effectively communist in nature, where, dear leader, get to set the prices of from cars to toothpicks, selects which industries he want to thrive the most, and has total control of the economy. That’s called central planning; he’s completely usurped the role of market forces, which otherwise would allow terribly-run businesses to die and good, sensible ones to succeed on their own merit.
Such a brainless comparison of US with North Korea. Trump’s policies are to revive manufacturing which are unfairly destroyed by cheap labour and subsidies in the Brics.
Conversely, NK’s is destroying its economy and the livelihood of its people.
There is negligible privately held capital in NK aside from the Kim family. Private capital plays a significant if not dominant role in the U.S. economy. Even if Trump wanted to be exactly like his good friend Kim, the U.S. economy would run on entirely different parameters.
But Banana (small) Dave, Kim and Xi are joined at the hip
So said the weaponless baka capon.
By the way you,don’t even understand your hero Trump. You have no idea how he thinks or what he’s planning to do. You just project your own deficiencies and puerile talking points wherever you think they fit, like trying to ram ill fitting pieces into a really bad jigsaw puzzle.
Says the fool with the smallest weapon of all.
It’s not too late for Modi to finally realize that India and China being the two biggest and oldest civilizations in Asia to join forces. They share a lot of common history. Buddhism and Kungfu are two major aspects of Chinese culture that have origins from India. Two countries have also been brutalized by western and European powers in the past. There is no reason for India to join these ex-colonialists to fight China.
Northern India and Western Asia have been brutalised by China for millennia. Now it is time for China to brutalise others using economic and military coersions?
I think the brutalizing was a two way street. Perhaps a little too distant to be relevant, given that a lot of this occurred even before Chrissy Columbus set sail.
Chinese culture has origins in India? ie you have been copying for millenia.
The toilet hand Dalit culture.
This is an excellent, sweeping, broad well thought out article. Trade, geopolitics, and economic relationships are full of ifs and buts and maybes. That is why it is so important to have national leaders who think ahead strategically rather than playing to false sense of nationalism and grandstanding. As always throughout human history, we live in artificially manufactured unsettling times. All academic economic theories show, empirically, that Tariffs make things worse. Only time will tell as old rules appear to become increasingly irrelevant.
Dr. Ashok Roy
USA
Good comments. However, Trump’s policies and, increasingly other democratic nations, aim to level-up the playing field unbalanced by unfair economic subsidies and cheap and forced labour, not nationalism or grandstanding. Negotiated tariffs is the only way to go if we do not consider ourselves as a single community.
I think the Asians are finally realizing how much they’re worth to a white supremacist president. Well, except for the Japanese, who’re still yearning to hear the west say: ‘You ppl don’t look like us, but you’re not too bad.’ They desperately need the approval of the white colonialist. Only weird case is the British, shameless opportunists, who’ll bend the knee to anyone who’ll offer them a handout.
The backlash to Ramaswamy’s comments also illustrate that elements of MAGA does not necessarily view Indian American engineering talent as a net positive as opposed to replacement narratives.
But the Indians look up to whiteness.
Coming to think about it, so do the Chinese (ladies)
No, they poop on the Dalit Capon.
It took a slap fro Trump to wake Modi and India
One swallow doesn’t make a fall (or a friend)
Tell that to the toilet hand snake in the elephant dung pile.
This development is precisely what Brics needs to galvanize it into concrete action. Now, it can’t just sit around twiddling its thumbs, procrastinating any longer. It suddenly has enormous incentive to develop a robust inter-nation economy impervious to US meddling. A gift from Trump.
It’s always been India that held everything back playing one side against another. China’s not going to fully embrace India. India has to show China what it can do for China. If China does nothing, India has to cut a deal with chump. A bad deal.
Indians prefer tall, pale round-eyes to short squints
Capon needs to look up to everyone though.
And yet can’t get at what ‘he’ longingly reaches for.
Like a typical Dalit Capon, always looking up to its betters.
India’s multi-vector diplomacy is proving to be non-viable.
India needs to recognize that it can’t compete with China, as has Russia, and begin working with it, even if it must come at the cost of swallowing some of its pride. The West is no friend of the Indian.
That’s the problem. India doesn’t recognise the obvious. Like Rooster. He doesn’t know open deficating is just wrong.
I go away for a week, but I’m still living rent free in your head !
Someone cannot afford to pay rent.
Not only Brics, but Europeans should be making a beeline for China.
Berke by name, berk by nature. Euro’s prefer the US, no one trusts the Tiddlys.
Modi led the way to kneel before Xi.
A statesman can see a pretender like Trump from a world away. Putin knows Trump’s weakness. We all know Trump’s weakness. But Trump and his flock of MAGAtards do not yet know it. Criticism is not directed solely at Trump however. He is being fed garbage intel by captured Senators and operatives. And some powerful people have kompromat on him. The story of US politics. The American Deep State is the fundamental problem – unelected fools who follow dead end ideology.
Statesmen like Macron, Starmer, Merkel ?
Oops, sorry I fell over laughing.
Yup, a very sorry Dalit.
China and India should join forces.
India is one of the founding members of Brics, but is not a member of the New Silk Road, that China is building. If India were to join, China would have its hands full, financing, and helping to build a modern industrial and economic infrastructure in India. It would no doubt be the largest joint business partnership in the world.
India did china a favour by not joining. Cause it hobbled India and led us all to this spot of China dominance
India also did China a favour by not joining RCEP. Now SE Asia (with the exception of US-loving colonised Filipinos) and China are business pals. Big win-win for both sides.
No, it would ruin the applecart with rot.