How is US President Trump doing What he is Doing? India and Tariffs (Part II)

In the last post titled "How is US President Trump doing What he is Doing? India and Tariffs (Part I)", we discussed how the US President imposed the "reciprocal tariffs" on India through the Executive Order 14257 of 2 April 2025 ("Order"), including Sections 1 and 2 of the Order. In this post, we continue to discuss the Executive Order 14257.

Section 3(a) of the Order:

• imposed a uniform "additional ad valorem" duty of 10 percent%, which would apply from 5 April 2025;
• imposed a "country-specific ad valorem rates of duty" as per Annex I to the Order on articles imported into the US, which was to apply from 9 April 2025;

Section 3(b) provided for exceptions from the ad valorem duties for articles mentioned in Annex II of the Order. Types of the articles forming a part of Annex II are elaborated in Section 3(b):

• (i) articles encompassed by 50 U.S.C. 1702(b); 
• (ii) articles and derivatives of steel and aluminum subject to the duties imposed various laws and proclamations mentioned in the Order;
• (iii) automobiles and automotive parts subject to the additional duties imposed pursuant to various laws and proclamations mentioned in the Order; 
• (iv) other products enumerated in Annex II to the Order, including copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products; 
• (v) articles from a trading partner subject to the rates set forth in Column 2 of the Harmonized Tariff Schedule of the United States (HTSUS); and 
• (vi) all articles that may become subject to duties pursuant to future actions under section 232 of the Trade Expansion Act of 1962. 

Section 3(c) clarified that the rates established under the Order were "in addition to any other duties, fees, taxes, exactions, or charges applicable to such imported articles". Exceptions to this general rule were provided in Sections 3(d) and 3(e) of the Order. These exceptions were specific to Canada and Mexico. 

Section 3(f) provided that the ad valorem rates of duty in the Order applied only to non-U.S. content of a subject article where at least 20% of the value of the subject article is U.S. originating. 

The second executive order relevant for India is the Additional Tariff imposed on India for importing Russian Crude Oil through Executive Order 14329 dated 6 August 2025. The Executive Order is titled "Addressing Threats to the United States by the Government of the Russian Federation" ("Russian Crude Order").

The Russian Crude Order was imposed purportedly under "the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601  et seq.), section 604 of the Trade Act of 1974, as amended (19 U.S.C. 2483), and section 301 of title 3, United States Code". 

Earlier, Executive Order 14066 (8 March 2022) titled "Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts To Undermine the Sovereignty and Territorial Integrity of Ukraine" ("Earlier Order") was issued under the Biden Administration. The Russian Crude Order was issued further to this Order.

The Russian Crude Order is titled "Addressing Threats to the United States by the Government of the Russian Federation". Section 1 of this Order provides a background for the Order. It stated that the Earlier Order prevented import into the US of Russian crude oil, among other things. 

It further stated that the situation, as informed by "various senior officials" that the actions of Russia regarding Ukraine justifies continuance of national emergency described in Executive Order 14066 and that Russian actions and policies continued "to pose an unusual and extraordinary threat to the national security and foreign policy of the United States."

In order to deal with the national emergency, the Russian Crude Order stated that it was necessary and appropriate to impose additional ad valorem duty on imports from India: 

"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." (emphasised)

Section 7(a) of the Russian Crude Order defined “Russian Federation oil” to mean "crude oil or petroleum products extracted, refined, or exported from the Russian Federation, regardless of the nationality of the entity involved in the production or sale of such crude oil or petroleum products." Thus, this included production and sale by Indian companies of Russian crude oil in Russia. 

Section 7(b) defined the term “indirectly importing” to include "purchasing Russian Federation oil through intermediaries or third countries where the origin of the oil can reasonably be traced to Russia, as determined by the Secretary of Commerce in consultation with the Secretary of State and the Secretary of the Treasury."

Section 2 of the Russian Crude Order is akin to a charging provision in a taxing statute. Section 2 imposed "an additional ad valorem rate of duty of 25 percent" on articles imposed from India. The order was to be effective 21 days after 6 August 2025.

Section 3 clarified that this duty was "in addition to any other duties, fees, taxes, exactions, and charges applicable to such imports".

Section 4(b) of this order stated: "Should a foreign country retaliate against the United States in response to this action, I may modify this order to ensure the efficacy of the actions herein ordered."

Section 4(c) is important. It stated that if Russia or a foreign country impacted by the Russian Crude Order take significant steps to address the national emergency, (i.e., Russian invasion of Ukraine, although not explicitly stated) "and align sufficiently with the United States on national security, foreign policy, and economic matters, I may further modify this order." (emphasised).

It is clear from this that in effect US wanted India not only to stop crude oil imports but to align with it on "national security, foreign policy and economic matters"! No wonder Indian Government reacted the way it did by showing close alignment with Russia and China.

Interestingly, the Russian Crude Order, unlike the Executive Order 14257 of 2 April 2025 (reciprocal tariff order), contained a severability clause in Section 8: "If any provision of this order or the application of any provision of this order to any individual or circumstance is held to be invalid, the remainder of this order and the application of its provisions to any other individuals or circumstances shall not be affected."

The Trump administration was probably doubtful about legality of the order and advised insertion of the severability clause.

More on the issue in another post.

How is US President Trump doing What he is Doing? India and Tariffs (Part I)

In the last post titled "Why is US President Donald Trump Doing What he is Doing? India and Tariffs" (8 September 2025), we discussed the possible rationale why US President Trump has imposed "reciprocal tariffs" on India. In this post, we address the "how" question.

President Trump issued the Executive Order 14257 of 2 April 2025 ("Order"). The Order is titled "Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits". The order is approximately 71 pages. It is not sure if Indian media houses have discussed or analysed this Order. 

There is a lengthy introduction to the Executive Order, seven sections and three annexures. The Order is purported to be issued by the President of the US purportedly under the authority of the US Constitution and US Laws, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.)(IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.)(NEA), section 604 of the Trade Act of 1974, as amended (19 U.S.C. 2483), and section 301 of title 3, United States Code,

India has been mentioned at least six times expressly in this order. On the Most Favoured Nation ("MFN") status and implications on US tariff, the Order states:

"Put simply, while World Trade Organization (WTO) Members agreed to bind their tariff rates on a most-favored-nation (MFN) basis, and thereby provide their best tariff rates to all WTO Members, they did not agree to bind their tariff rates at similarly low levels or to apply tariff rates on a reciprocal basis. Consequently, according to the WTO, the United States has among the lowest simple average MFN tariff rates in the world at 3.3 percent, while many of our key trading partners like Brazil (11.2 percent), China (7.5 percent), the European Union (EU) (5 percent), India (17 percent), and Vietnam (9.4 percent) have simple average MFN tariff rates that are significantly higher." (emphasised)

In other words, this para of the Order states that while the WTO obligations relating to MFN have created a scenario where average US tariff is at only 3.3%, countries such as India impose average tariffs at 17%. Note that India's tariff is the highest among the countries mentioned, the next highest being Brazil at 11.2%. 

For those uninitiated to the concept of MFN, please see here.

The Order then goes on to state that tariffs on particular products reveal far more discrepancies than the average tariffs noted:

"Moreover, these average MFN tariff rates conceal much larger discrepancies across economies in tariff rates applied to particular products. For example, the United States imposes a 2.5 percent tariff on passenger vehicle imports (with internal combustion engines), while the European Union (10 percent), India (70 percent), and China (15 percent) impose much higher duties on the same product. For network switches and routers, the United States imposes a 0 percent tariff, but for similar products, India (10 percent) levies a higher rate. Brazil (18 percent) and Indonesia (30 percent) impose a higher tariff on ethanol than does the United States (2.5 percent). For rice in the husk, the U.S. MFN tariff is 2.7 percent ( ad valorem equivalent), while India (80 percent), Malaysia (40 percent), and Turkey (an average of 31 percent) impose higher rates. Apples enter the United States duty-free, but not so in Turkey (60.3 percent) and India (50 percent)."

The statistics in the aforesaid Para are tabulated for the convenience of the readers:

It is in this background facts, among others, that the Executive Order has been passed. It needs to be examined from an Indian perspective as to whether these facts are correct and the justification for India to impose higher tariffs. 

Section 1 of the Executive Order declares national emergency and states: "I have declared a national emergency arising from conditions reflected in large and persistent annual U.S. goods trade deficits, which have grown by over 40 percent in the past 5 years alone, reaching $1.2 trillion in 2024." This trade deficit is, according to the Order, owing not only to tariffs but also to non-tariff barriers such as "technical barriers to trade; non-scientific sanitary and phytosanitary rules; inadequate intellectual property protections; suppressed domestic consumption ( e.g., wage suppression); weak labor, environmental, and other regulatory standards and protections; and corruption." Section 1 also describes the consequences of these barriers:

"The cumulative effect of these imbalances has been the transfer of resources from domestic producers to foreign firms, reducing opportunities for domestic manufacturers to expand and, in turn, leading to lost manufacturing jobs, diminished manufacturing capacity, and an atrophied industrial base, including in the defense-industrial sector. At the same time, foreign firms are better positioned to scale production, reinvest in innovation, and compete in the global economy, to the detriment of U.S. economic and national security."

Ultimately, these barriers are some how related to "national security" and "military readiness". "Finally, the large, persistent annual U.S. goods trade deficits, and the concomitant loss of industrial capacity, have compromised military readiness; this vulnerability can only be redressed through swift corrective action to rebalance the flow of imports into the United States."

The linkage to national security and military readiness is perhaps, owing to the need to justify the Order and safeguard against challenges, both under US and international trade laws.

Note that the focus of the Order is on domestic production, domestic manufacturing and atrophy of industrial base. Readers may like to connect it with the previous post regarding Mr. Trump's election agenda on similar lines. 

Section 1 declares national emergency. Section 2 provides for reciprocal tariff policy. It contemplates imposition of "additional ad valorem duty" on all imports, which would start at 10%. Thereafter, it would increase to the rates mentioned in Annex I to the Order. This duty would apply, according to the Order, until such time as Trump determined that the underlying conditions mentioned in the order were "satisfied, resolved, or mitigated." Annex I mentions the "Reciprocal Tariff, Adjusted" for India as 26%. 

More on the Executive Order in another post.

Why is US President Donald Trump Doing What he is Doing? India and Tariffs

US President, Mr Donald Trump ("Trump" or "Donald Trump") is being called in the media and by his political opponents and critics as mindless, dumb, idiot and stupid, especially regarding his 50% tariff on India. 

So, why is Trump doing what he is doing? For this, it would do good to look at his election speeches and election results. So, who voted for Donald Trump? Mainly, Whites and Hispanics, according to statistics (here and here), chose Trump over Ms Kamala Harris. This clarifies as to Trump's vote base.

Hindsight is always better. If we look back, we get more clarity on what he is doing. Trump used China as the extreme example to run his campaign without alienating his voters (such as Indian Americans) but his aim was to tariff India too. It was hoped that there would be a supply chain shift from China to India. 

Trump's election campaign team called his election agenda as Agenda47 (also see this), which actually is a set of videos highlighting Trump's agenda. It would do well for media to look at some of them to understand Trump's decisions. 

One of the core ideas of Trump was that the Biden administration, his political opponents then in power, was "punishing domestic producers and rewarding outsourcers". Trump wanted to incentivise domestic production by creating "a new pro-America system of universal baseline tariffs on most foreign products that rewards domestic production while taxing foreign companies." The purpose of these tariffs on "most foreign products" (emphasised) was to make America "quickly" into a "manufacturing powerhouse".

This video highlights his agenda on this issue. Key points of this agenda are provided in the link and are reproduced below for convenience, to the extent relevant to the context:

• "Rather than raising taxes on American producers, President Trump will impose tariffs on FOREIGN producers through a system of universal baseline tariffs on most imported goods." (emphasised)
• "Higher tariffs will increase incrementally if other countries manipulate their currency or otherwise engage in unfair trading practices."
• "President Trump will establish new rules to stop U.S. companies from investing in China and stop China from buying up America, allowing only those investments that serve American interests."
• "A BETTER DEAL FOR AMERICAN WORKERS, FAMILIES, AND COMMUNITIES: President Trump’s plans will bring back millions of American jobs and generate trillions of dollars of new wealth to strengthen American society."

The "China" that Trump uses is not merely China but is a metaphor for all manufacturing hubs exporting manufactured goods to USA. The agenda states: "Raising tariffs on foreign producers while lowering taxes for domestic producers will help keep jobs and wealth in the United States." (emphasised)

The idea as per this agenda is to increase tariffs so much on manufacturing hubs such as China and India that US companies will establish manufacturing plants in USA, which would give jobs to the middle class in America: "Higher tariffs create millions of new jobs, increase real household income, boost GDP, increase domestic manufacturing output, and generate hundreds of billions of dollars in new government revenue." 

The idea of a "universal baseline tariff" was to implement a uniform tariff on all imports. In addition, it was also contemplated that reciprocal tariffs would be imposed:

"To achieve this goal, we will phase in a system of universal, baseline tariffs on most foreign products. On top of this, higher tariffs will increase incrementally depending on how much individual foreign countries devalue their currency. They devalue their currency to take advantage of the United States, and they subsidize their industries, or otherwise engage in trade cheating and abuse. And they do it now like never before, and we had it largely stopped and it was going to be stopped completely within less than a year." 

Whether Trump's agenda, which are being implemented, could stand the test of the trade laws, US and international? Time will only tell. 

Just a caution for Indians watching the news daily. Don't be swayed by Indian news media calling Trump names. Diplomacy and international trade does not gain even a bit by this name calling. What is important to understand why Trump is doing what his doing and explore means of how Indians at the micro-level and the macro-level should respond. Just imagine what happens to Indian manufacturing if the production shifts from India to US or elsewhere owing to high tariffs. For instance, US$ 241.84 million worth textiles were exported from India to US in 2024. 

• What happens to the manufacturing companies which manufactured these textiles? 
• What is the status of these manufacturers? 
• What are they saying? 
• What is their Plan B? 
• What happens to them in the long run if US wants to manufacture these garments? 
• What is the Government's plan? 

These are some questions that Indian media, economics/ trade scholarship and stakeholders should analyse, discuss and address.

[Edited on 08.09.2025 after posting to correct some errors and formatted afresh. Substance of the arguments remain]