TWTW note

CWA # 1780
TWTW note
Trump tariffs:
Weaponization of access to the US economy

The World This Week #322 Vol 7, No 31, 03 Aug 2025

Abhiruchi Chowdhury
3 August 2025
Photo Source: Reuters

The following note was earlier published in The World This Week #322 Vol 7, No 31, 03 Aug 2025

What happened?
On 31 July, US President Donald Trump authorized an executive order for imposing new import duties on countries which were unable to strike a deal with the US, in the 90-day pause period, post announcement of reciprocal tariffs. The import duties are set to be applicable from 07 August. 

On 30 July, Trump on his social media handle announced about imposing 25 per cent duties on goods imported from India. Justifying the move he criticized India by writing “they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of energy.” On 31 July, yet again expressing his discontent with India’s relationship with Russia, he wrote “they can take their dead economies down together.” 

For Canada, the Trump administration imposed 35 per cent duties on imported goods which are not included in the US-Mexico-Canada FTA. Around five per cent of the exported goods to the US from Canada are likely to come under the ambit of 35 per cent duties, applicable from 01 August. On the same, the Canadian PM Mark Carney said “Ottawa is disappointed.” Trump alleged that Canada remains unsuccessful in putting an end to the smuggling of fentanyl and other drugs from Canada.  

For Brazil, the imposition of 50 per cent tariffs was a response to the current Brazilian government indicting erstwhile President Jair Bolsonaro. The current Brazilian president Luiz Inacio Lula da Silva saw the tariffs as subversion of “national sovereignty and the historical relationship between the two countries.” Some of the items which will not incur tariffs are civil aircraft and parts, energy items, fertilizers, aluminum, tin etc. 

What is the background?
First, Trump’s complaint on India’s cooperation with Russia in the energy sector. After 2022, India emerged as the one of the largest importers of Russian oil. For the financial year 2024-25, India on an average imported 4.88 barrels per day. Further, close to 49 per cent of the stakes in India’s Nayara, which is country’s second largest oil refinery, are with Russia’s state oil company Rosneft. President Trump, who had earlier vowed to put a quick end to Russia-Ukraine war, warned the countries importing oil from Russia of enforcing 100 per cent duties on their exports to the US. 

Second, Trump’s complaint on fentanyl smuggling through the US-Canada border. On 1 February, President Trump had enforced 25 per cent duties on Canada’s exports to the US. As per the Trump administration, the move was meant to compel Canada to employ stringent measures for controlling the flow of illegal migration and fentanyl. Nevertheless, the seriousness of fentanyl problem is questionable. As per Centers for Disease Control and Prevention, there has been a decrease of 21 per cent in cases of lethal overdosing from fentanyl and other drugs. On top of that, less than one per cent of the fentanyl that is smuggled into the US, comes through the Canadian border. 

Third, Trump’s support for Bolsonaro in Brazil. In January, 2023, protesters in favor of Bolsonaro attempted to barge inside Brazil’s congress, Supreme Court and president’s residence. The protesters were unhappy with Bolsonaro losing the elections and wanted to reverse it. The incident is very similar to the assault on US Capitol building in 2021 by supporters of Trump. Trump, during his first term shared cordial ties with the former President of Brazil. Supporting the former president he also drew parallels between his and Bolsonaro’s legal troubles. Backing Bolsonaro, on 7 July, Trump on his social media wrote “Brazil is doing a terrible thing on their treatment of former President.”         

What does it mean?
First, the problem for India’s textile sector is not just imposition of 25 per cent tariffs, but also that its competitors from Bangladesh and Pakistan would incur much lesser tariffs. The signing of the free trade agreement with the UK after which Indian goods would be at par with the goods of other competing countries might provide some relief. However, the same would only be applicable from the next year. New Delhi would probably have to look for other partners such as the EU for offsetting the loss due to the US tariff increase. Nevertheless, the loss would be to American consumers who anyway have to pay increased duties on readymade garments irrespective of whether the same has been manufactured in Vietnam or India. 

Second, it is quite evident that the imposition of tariffs on Canada is not because of the illegal smuggling of fentanyl. The steel and aluminum exports from Canada already faces 50 per cent duties in the US, whereas cars and accessories incur 25 per cent duties. An additional 35 per cent duties on products which do not come under USMCA could be a consequence of Ottawa’s shift from pro-Israel stance.

Third, the overall idea of reciprocal tariffs was to reduce US’s trade deficit. However, the Trump administration deploying tariffs on countries like Brazil with which US has a trade surplus imply that access to US economy is being weaponized for interfering in domestic politics.

About the Author
Abhiruchi Chowdhury is research assistant at the National Institute of Advanced Studies (NIAS).


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