“Pressure Tactics”: Raghuram Rajan Calls out Trump’s Shift in Mood Against India Amid Tariff Tantrum

Amid the ongoing tariff salvo, Former Governor of Reserve Bank of India Raghuram Rajan has criticised US President Donald Trump for imposing 50 per cent tariffs on India and Brazil, calling it a “pressure tactics”.

Speaking to Brazilian economic and financial publication Valor, Rajan addressed Trump's apparent “shift in mood” against India. He further said that while trade with Russia could be “reconsidered”, it is “hard to negotiate with a gun to your head” and that this seems like an “exercise in power” from the US.

Last week, the American President imposed 50 per cent tariffs on India as “punishment” for buying oil from Russia. Earlier he had also criticised India and Brazil for being part of what he dubbed “anti-American” BRICS bloc. Besides India, Brazil has also been slapped with similar 50 per cent duties.

Hard to Negotiate With Gun to Head, Says Rajan

Talking about negotiations with the US, the former RBI governor and renowned economist said, “It’s hard to negotiate with a gun to your head. And that’s basically what’s happening right now. I hope sanity will prevail in US relations with India.”

According to Rajan, “Lowering tariffs can help our economy. But again, it’s hard to negotiate with a gun to your head. I hope that tempers cool and talks resume, because a 50 per cent tariff is unsustainable—not just for India, but also for the US, which risks alienating a country it hopes will be a strategic partner.” He further warned, “People remember these things for a long time, and turning them away is rarely smart geopolitics.”

US Tariffs about ‘Exercise of Power’

The economist said that even though trade talks between India and US are expected to happen around October-November this year and India is firm on some negotiating factors, it is essential to note “that’s not how it’s worked for countries that have already reached agreements. This isn’t about a balanced trade deal; it’s an exercise of power.”

He further noted that India could give in on trade with Russia, since current prices are not much different across markets. “If Russian oil were cut off entirely, prices would rise, but India could handle that. The bigger issue is political: an overt public decision to stop buying from Russia would be seen domestically as bowing to US pressure, which plays badly in any democracy. If Washington had quietly asked India to phase out Russian oil, it might have been acceptable,” he added.

US tariffs are ‘Unviable’

Addressing the impact of the tariffs, Raghuram Rajan stated that $80 billion of Indian exports to the US would become “unviable”, and in return some $40 billion of US imports into India, including Apple products, could “hurt America to some degree”.

Further talking about Donald Trump's opposition to BRICS, Rajan said that as a group of emerging economies, the interests of BRICS nations has “diverged over time”. He further mentioned, “India is not anti-US, and neither is Brazil in its current government. Being pulled into a bloc seen as anti-American is problematic for both.”

“If tariffs stabilise, even at high levels, the world will adapt. It won’t be as efficient as the low-tariff era, but supply chains will adjust over time. The bigger problem is volatility. If today it’s 50 per cent tariffs on one set of countries and tomorrow another, uncertainty will keep disrupting trade and investment. Stability is essential, and that’s what’s in the shortest supply right now,” the economist noted.

Early Coalition with US Would Increase Bargaining Power

As per the former RBI governor, it would have been better to form a broad coalition early on, before individual countries struck their own deals with the US as this would have increased bargaining power. “However now, with Japan, the EU, and the UK being satisfied with their arrangements, it’s harder—especially if China is excluded, since both Beijing and Washington may prefer separate dealings,” he noted.

“It’s good for Brazil and India to talk about boosting trade and investment, but a united global front is probably too late at this stage. Still, maintaining dialogue is important, because this may not be the last disruption—more could come if the US administration targets other countries,” he added.