The negotiations went almost down to the wire. The USA’s new tariffs were due to come into effect on August 1, after having been paused by President Donald Trump himself after he announced them on April2. While the exact revision of the rate is not known, it is going to be lower than the 29 percent announced in April. One indicator might be that India’s April rate of 26 percent has only been reduced marginally, to 25 percent, while it has had additional tariffs placed on it for buying Russian arms and oil. It should not be forgotten that when India ran afoul of poyrntial US sanctions when it purchased the Russian S400 air defence system, it was spared because of its usefulness as a regional counterweight against China. However, after its recent clash with Pakistan over the Pahagam incident, its usefulness to the USA has been thrown into doubt.
Meanwhile, the pillar of the deal with Pakistan has come from the rather unexpected quarter of oil exploration, with a US firm, to be selected, to explore Pakistan’s coastline in his post on the Internet, Mr Trump even remarked: “Who knows, maybe they’ll be selling oil to India before long.” Certainly, India would be a potential customer for any exportable surplus, but Mr Trump should keep in mind the fate of the gas pipeline from Iran, which was to go to India after passing through Pakistan. That has fallen victim to US sanctions on that unfortunate country. It does seem that though Mr Trump has allowed geopolitical considerations to influence the tariff reduction process. The extra ‘anti-Russian’ tariffs on India are explicitly geopolitical in nature, and have nothing to do with fairness or nontariff barriers, which Mr Trump also accused India of imposing. Pakistan, on the other hand, has escaped ‘anti-Chinese’ tariffs. Not imposing was itself a geopolitical decision, which the USA has probably taken because it has taken into account the events of June.
In some ways, the deal was the easy part. Now will come the rather more difficult task of defending it to the people in the teeth of the criticism it is likely to provoke, especially among those who have been calling on the USA to help them return to power, after it allegedly conspired to oust them. The government will claim it got the best possible deal under the circumstances, which does not mean that it was the best possible deal for the country.
