India is struggling to cope with the economic fallout from President Donald Trump's tariff threats, which have left officials in New Delhi shocked, disappointed, and unsure how to respond.

Trump's harsh language, calling India's economy "dead," its tariff barriers "obnoxious," and its people indifferent to the plight of the Ukrainian people, was like a slap in the face, according to an official in New Delhi, who asked not to be named because the discussions were private. Officials don't have a pattern for dealing with this kind of public attack, the person said, adding that the latest developments have strained India's relationship with the US.

Trump said Tuesday that he would raise 25% tariffs on Indian exports to the US "substantially over the next 24 hours," citing the Asian nation's high trade barriers and purchases of Russian oil. India "is fueling a war machine, and if they were going to do that, I wouldn't be happy," Trump told CNBC.

The Indian government is now bracing for higher tariffs and trying to limit the potential economic damage. Prime Minister Narendra Modi has urged Indians to buy more local goods to offset the decline in global demand. The Ministry of Commerce and Industry is discussing ways to help exporters who will be hardest hit, such as those in the gems, jewelry, and textiles sectors. Officials said they will continue to pursue backchannel negotiations to help defuse tensions.

India has been a target of Trump for weeks because of its economic ties with Russia. The US president has given Vladimir Putin until August 8 to reach a ceasefire with Ukraine and wants to increase pressure by targeting energy purchases from countries like India and China that help keep the Russian economy afloat.

Modi's government has so far remained firm, saying the US is unreasonably targeting it because of its ties with Russia, its largest supplier of oil and military equipment. Officials have signaled that they will not instruct refiners to stop buying Russian crude. (alg)

Source: Bloomberg