As the clock ticks toward the August 1 deadline for the US to potentially impose higher tariffs on global imports, former RBI Governor Raghuram Rajan has raised concerns over the growing inclination of the US administration to double down on its tariff strategy.His remarks come in the backdrop of US President Donald Trump’s move to impose a 26% reciprocal tariff on Indian products—originally announced on April 2 but suspended until July 9, with a fresh implementation date set for August 1.Rajan pointed out that rising US tariff revenues, coupled with a resilient labour market and stable growth indicators, may embolden Washington to continue this aggressive trade stance. With the impact of tariffs only mildly reflected in goods prices so far, the administration could interpret this as validation of its approach, possibly paving the way for wider tariff coverage.
India, which is still in negotiations with the US, finds itself in a precarious position. Rajan noted the uncertainty surrounding how India will be treated—whether it will be offered more favourable terms or be bracketed with the broader global tariff structure.With examples like Vietnam facing duties as high as 20% on most goods, there’s a risk that the US could push for similarly steep levies on Indian exports.For India, the implications are significant. The US is the country’s largest export market, and any escalation in tariffs could impact key sectors such as pharmaceuticals, textiles, and engineering goods. The looming decision also casts a shadow over ongoing trade discussions and bilateral economic cooperation.For full interview, watch accompanying videoAlso Read | India, US may hold 6th round of bilateral trade talks in August: Govt sources
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