India Aghast at Donald Trump’s ‘Dead’ Economy Jibe, 25% Tariffs

Donald Trump with Narendra Modi at the White House on Feb. 13. Photographer: Francis Chung/Politico/Bloomberg Photo by Francis Chung /Bloomberg

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(Bloomberg) — Shock, dismay and angst swept across India as businesses, policymakers and citizens digested US President Donald Trump’s sharp remarks and a surprise 25% tariff rate earlier this week.

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While Indian government officials weighed a response and business groups tallied the cost of the trade barrier, the local social media flared up with users protesting Trump’s comments and criticizing Indian Prime Minister Narendra Modi for not speaking up.

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It started with Trump saying that India’s trade barriers were the “most strenuous and obnoxious,” in a Truth Social post July 30. He added the US may also impose a penalty for New Delhi’s purchase of Russian weapons and energy. Less than a day later, he ripped into India again for aligning with Russia, calling them “dead economies” in another post.

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With no imminent trade deal, the 25% tariffs kicked in as of Friday. India is hardly alone in facing Trump’s trade wrath — and not the subject to the very highest rates — but the news left business and political leaders wondering how to cope with the fallout.

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‘Blunt-Force’ Message

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“Overnight, the US-India trade equation shifted from tense to turbulent,” said Akshat Garg, assistant vice president at Choice Wealth, a Mumbai based financial services firm. The levies “feel less like structured policy and more like a blunt-force political message.”

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Complicating the narrative around the India trade deal — or the lack of it — was the US pact with its traditional rival Pakistan that came through on the same day. 

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As the US released rates across the world on Aug. 1, India’s relative disadvantage to competitor exporting countries became more apparent, dampening moods and stoking tempers further. 

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“The biggest blow is that Pakistan and Bangladesh got a better rate than us,” V. Elangovan, managing director at SNQS Internationals, an apparel maker in the south Indian manufacturing hub of Tirupur, told Bloomberg News. “We were expecting something in the 15 to 20% range.” 

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India’s annoyance can be traced back in part to Trump declaring himself the peacemaker that helped broker a ceasefire in the armed conflict between India and Pakistan in May. The move was seen as an effort to upstage Modi and put the two South Asian neighbors on an equal footing, despite India’s larger military and economy.

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The events of this week have cemented that impression further in the eyes of some Indian observers.

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When the tariff rate news first dropped in late Wednesday evening in India, Ashish Kanodia recalls being “very disturbed.” A director at Kanodia Global, a closely held exporter that gets over 40% of its revenue from the US selling home fabrics to toys, the entrepreneur already has two of its largest US customers seeking discounts to make up for the levy.

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“The next six months are going to be difficult for everyone,” Kanodia said, adding that profit margins will be squeezed. If the pain continues for “months and months,” he said he’ll have to start cutting his workforce.