WASHINGTON (MaceNews) – There was no last-minute reprieve for India, as of midnight ET hit with one of the highest tariff rates in the world.
The implementation of a 50% rate shuts off most trade with the U.S. and there have been many accounts of sectors of the Indian economy already feeling the severe effect. For instance, the Washington Post detailed how India’s diamond capital, Surat, in western Gujarat state – Prime Minister Modi’s home – has already been devastated by layoffs and a paralysis of much of the region’s support businesses. Up to a million diamond workers has been employed there, with half of their product shipped to the United States – up to now.
The trade-killing tariff is in contrast to what has been threatened for Pakistan, adding to the chronic regional tensions. Critics of President Trump have called his trade policy toward India – negating decades of U.S. efforts to strengthen ties – an incoherent mess. The Oval Office rationale for the escalation from 25% to 50% has been India’s continuing purchase of Russian oil. But China and the European Union also buy Russian oil without such extreme retaliation.
Trade talks with India have been canceled and there is no resolution to what has become a trade battle is in sight. The Modi government has heightened its outreach to China and other Brics countries, a pointed policy shift which may signal a fundamental realignment.
The other tariff development may have a much bigger effect on the American consumer, the Friday deadline for the imposition of tariffs on small shipments which has already prompted postal services around the globe to suspend small-value shipments to the United States. The duty-free status of imports worth $800 or less is cut to $100 or less on Friday, which could come as a shock to buyers of Chinese Labubu dolls. Should the proper tariff not be paid then $80 is automatically added to the cost of the import. The president’s reason for the first such treatment of small shipments in many decades is to cut the illegal import of fentanyl, most of which enters the country in vehicles crossing the southern border.
How extensive will be the effect? Last year there were 1.4 billion packages delivered to the United States worth nearly $65 billion that enjoyed the $800 or less exemption.