US President Donald Trump’s move to impose 25% tariffs on India may have its reasons rooted in political issues, says an SBI Research report. India and the US have been engaged in trade deal talks for many months now and both sides had till a few days ago indicated good progress. Trump has until recently said that the US was nearing a deal with India.
Yet a stalemate in talks continued and last week Trump announced the 25% tariff rate on India, along with the warning of an additional penalty for India’s arms and oil trade with Russia.
Why did the trade talks stall? SBI Research lists three political reasons for the deadlock in trade talks - and one of them has a Pakistan angle to it!Trade An Incorrect LeverAccording to the SBI Research report, “6 months into second term, job approval ratings of POTUS Donald Trump seem to hit bottom (37%) basis Gallup findings, just a tad better than all time lows of 34% witnessed at the end of his first term… alarmingly, the steepest fall has been seen amongst independents (17-point decline to 29%) while adults have a 10 points decline in these months marred by many decisions.”
“…we have a situation - has long defined the Washington DC culture, complex and evolving threats camouflaged under the seemingly innocuous phrase…. We wonder if the lingering stalemate in trade talks, with an unrelenting Indian delegation protecting her sovereignty fiercely, led to a decision imposed upon the largest democracy whose reverberations stretch beyond mere numbers,” it said.
How much will tariffs cost US households?
The Dangerous Crypto PushWith a frenzy created around VDAs (Virtual Digital Assets), chiefly crypto currencies and stablecoins, the US administration’s agenda of making America the crypto capital increases the prospect of loss of confidence in the Greenback, which itself appears destined to reach a tipping point as the reserve currency of the world, as US strives to reduce trade deficit with its partner countries through trade deals, notes SBI Research.
Also Read |
Big message! PM Modi strikes defiant ‘Make in India’ note in face of Trump’s tariff & penalty threats; India to continue buying Russia oil“The recently passed GENIUS act proposing a regulatory makeover and deeper integration of Stable coins with the traditional financial system, wishes the hegemony of the Dollar to remain intact since the stablecoins (pegged 1:1 to USD) would require tokens to be backed by liquid assets, viz. the USD and T bills – while mandating issuers to publicly disclose the composition of their reserves each month,” it notes.
Seemingly ridiculing Pakistan’s push to join the crypto bandwagon, SBI Research said, “Across the border, a rogue nation with broken economy, has taken a mistaken leap of faith by launching a digital currency pilot programme and showing the intent towards development of legislation for virtual assets through creating a regulatory and legal framework to govern digital currencies in banking, trade settlement, Fx and gold.”
Pakistan government has expressed readiness to expedite cryptocurrency implementation across banking institutions, currency exchange firms and gold trading sectors, according to a PTI report earlier this week.
Also Read |
‘More likely to happen in Lagaan, than...’: Harsh Goenka mocks Trump’s ‘Pakistan may sell oil to India’ suggestion; here's the reality of Pak’s ‘massive’ reservesThe deliberations regarding this initiative occurred in a senior-level conference on Tuesday, focusing on incorporating digital currencies within the nation's financial framework.
“The mess this neighbor of ours has put itself into on all counts makes the evolving situation simultaneously gravely ridiculous and comically pathetic,” SBI Research said.
“With economic integration intended through the National Crypto Council, whose CEO was appointed this May as the PM’s special assistant on blockchain and cryptocurrency with Minister of State status—this troubled neighbor looks set to venture into an area where the angel would fear to trade… Worse, its policy makers and Central Bank could have read the writing on the wall which is evident through blocking the CBDC developments in the US,” it adds.
Aim to rejuvenate BRICS partnership could have sparked stalemate“It is rather not difficult to see that the stubborn, yet strategically superb diplomacy of India could be rattling the feathers as Operation Sindoor, along with outreach to various jurisdictions post the tactical strike and frontloading efforts for a spirited BRICS partnership across trade and commerce augurs well for a credible alternative to the world at large, and the Global South in particular,” says SBI Research.
“This strategic positioning of brand India, the economic juggernaut and military prowess now ringing alarm bells across DM, could be one of the reasons for the House of Cards being built which can temporarily checkmate our journey, but would do little to stifle our spirits, or the can-do mentality,” it says.
Also Read |
India buying Russian oil an ‘irritant’ for Trump administration! How much crude does India get from Russia & will it stop after US penalty warning? Top 10 pointsTrump has repeatedly called BRICS a group that is ‘anti-US’, saying that it aims to destroy the dominance of the dollar. BRICS stands for a group of nations including Brazil, Russia, India, China, and South Africa. Other member countries are Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates.
Soon after announcing a 25% tariff rate on India, Trump told reporters, “We are negotiating right now and it's also BRICS. BRICS, which is basically a group of countries that are anti the United States and India is a member of that...It is an attack on the dollar and we are not going to let anybody attack the dollar. So it's partially BRICS and it's partially trade...We had a tremendous deficit.”
Last month he said, “You have this little group called BRICS. It's fading out fast, but BRICS is, they wanted to try and take over the dollar, the dominance of the dollar, and the standard of the dollar.”
Trump had warned that any country which is a part of BRICS will face an additional tariff.
Stay informed with the latest business news, updates on bank holidays and public holidays.
Discover stories of India’s leading eco-innovators at Ecopreneur Honours 2025