President Trump directed tariffs on Indian imports be increased to 50% on Wednesday. India was already facing the start of 25% tariffs going into effect at midnight Thursday, but by refusing to cease imports of Russian oil, which India refines and exports at a substantial markup, it made itself vulnerable to increased sanctions. Trump used as a vehicle for the action an executive order titled "Addressing Threats to The United States by the Government of the Russian Federation." The order reads, in part:
To deal with the national emergency described in Executive Order 14066, I determine that it is necessary and appropriate to impose an additional ad valorem duty on imports of articles of India, which is directly or indirectly importing Russian Federation oil. In my judgment, imposing tariffs, as described below, in addition to maintaining the other measures taken to address the national emergency described in Executive Order 14066, will more effectively deal with the national emergency described in Executive Order 14066.
Sec. 2. Imposition of Tariffs. (a) I find that the Government of India is currently directly or indirectly importing Russian Federation oil.
(b) Accordingly, and as consistent with applicable law, articles of India imported into the customs territory of the United States shall be subject to an additional ad valorem rate of duty of 25 percent.
The entire episode demonstrates the disadvantageous position in which Indian Prime Minister Narendra Modi finds himself. On the one hand, Modi has attempted to cultivate relationships with Trump and the West. On the other hand, the effects of the "non-aligned" impulse founded by Prime Minister Jawaharlal Nehru remain strong. Instead of looking West, India buys weapons from Russia. It is a charter member of the ridiculous BRICS organization despite being engaged in a so-far non-shooting border conflict with China.
.It has been obvious for some time that dealing in bootleg Russian oil was more lucrative to Delhi than trade relations with the U.S. Russian oil alone is worth more than double all exports to the U.S. Tuesday, Delhi released this statement:
Today, India's position seems to be that it is not interested in manufactured imports from anyone.
Ultimately, this is more about pride than economics. India has never been a close ally of the U.S., and this resistance gives Modi the opportunity to play to a domestic audience.
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