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This week, the White House announced that it was doubling tariffs to 50% on imports from India, due to the country buying oil from Russia.

Reporters looking for an expert to discuss how these tariffs will impact global trade and the economies of India and the US, please see the expertise of ���ϲ����� Professor of Economics He is an expert on Indian economics and international trade.

In reaction to the news, Professor Mitra responded:

• “These US tariffs apply to India’s goods exports. It is much more difficult, if not impossible, to put tariffs on its service exports. The US share in India’s  manufacturing exports is close to 20%, while the US share in India’s service exports is over 60%. If we look at India’s total exports to all countries, 40% is service exports. While India’s goods exports to the US are about $86 billion, its service exports to the US are about $186 billion. Therefore, while a 50% tariffs on Indian goods exports to the US  will cause significant damage to the Indian economy, it will be  somewhat limited by the fact that its service exports to the US are more than double that of its goods exports,” said Mitra.
• “Also, India is a large and diversified economy and has a very large domestic market, which producers there will certainly tap into. Recently, India has been signing free trade agreements with various countries. President Trump’s 50% tariff will push them into negotiating trade agreements with many more countries. Given that President Trump has imposed tariffs on 90 countries so far, many of those countries also will be looking for alternative markets for their own products. This will benefit India.  These trade agreements with other countries will further contain the impact of the Trump tariff on India. These agreements might take a little bit of time, so the immediate negative impact of the Trump tariff might be larger than what we see in the longer run,” said Mitra.

• “There are some estimates out there that the US tariffs will shave off 1 percentage point from India’s  currently projected growth rate of 6.5% for FY 2025-26, but others say that the growth reduction could be a bit larger,” said Mitra.

• “All of this remains to be seen. There was a meeting scheduled some time ago between US and Indian trade negotiators in New Delhi for the end of this month, so, at the very least, President Trump should not have expected any concessions from India before the end of this month. But even by the end of this month, the US is unlikely to get from India what it wants. Totally opening up its agricultural and dairy markets to American agricultural and dairy producers is what President Trump wants India to do. This would be political suicide for Prime Minister Modi (this will have tremendous political costs). Also, President Trump doesn’t want India to buy Russian oil. While it is true that India should not be buying that oil in light of the current Ukraine-Russia conflict (President Trump does not apply the rules on this uniformly on all countries), the Modi government has consistently argued that cheap oil benefits India a great deal. For a large and populous country like India with a population of over 1.4 billion, there is a big demand for oil and purchase of Russian oil leads to big savings for it. In addition, India has been processing Russian oil and selling that processed oil to other countries, which has been generating considerable revenues and profits,” said Mitra.

• “Thus, given the large political and economic costs of meeting President Trump’s demands, it is unlikely that India will provide him with any concessions. It is quite possible that President Trump’ negotiating team will come back empty handed from New Delhi in late August,” said Mitra.

• “It is also important to note that, given America’s problems with China, the US has wanted India to be a counter to China in that region. So India is of huge geopolitical importance to the US.  Thus, the geopolitics itself provides India with considerable negotiating power. If President Trump doesn’t understand that, it is not totally impossible that India will get pushed towards China’s side, in which case it is possible that it joins the currently China-led Regional Comprehensive Economic Partnership (RCEP) (a free trade agreement) as an equal member. In the situation and climate President Trump has created, it won’t be surprising if both India and China find this a mutually beneficial transaction.,” said Mitra.

To arrange an interview with Professor Mitra, please contact Ellen James Mbuqe, executive director of media relations at ejmbuqe@syr.edu.