Raghuram Rajan’s Wake-Up Call Reaction To Trump Tariffs, Why Is Trump Targeting India With Tariffs?

28th August 2025 at 1:59 PM

2 minutes read

New Delhi : Former Reserve Bank of India Governor Raghuram Rajan has said that US President Donald Trump’s decision to impose steep tariffs, including a 50% duty on Indian goods, is part of a wider strategy that goes beyond trade economics. Rajan explained that tariffs are being used not only as a trade tool but also as a means of exerting political and economic power.

Rajan said there were several reasons behind Trump’s tariff push. “I think certainly he believes that a current account deficit, trade deficit is evidence that other countries are taking advantage of the United States rather than sending goods cheaply to the United States, which the US consumer benefits from,” he said.

Trump has held this view since the 1980s, when he was critical of Japan. Rajan pointed out that the former US President sees tariffs as a way to level the playing field. Another reason, Rajan noted, is Trump’s belief that tariffs act as a tax on outsiders rather than on US consumers.

According to him, Trump has held this view since the 1980s, when he was critical of Japan. Rajan pointed out that the former US President sees tariffs as a way to level the playing field. Rajan noted, is Trump’s belief that tariffs act as a tax on outsiders rather than on US consumers. Therefore it’s a cheap way of getting revenues, which can then help offset some of the tax cuts that he has made, Rajan said.

He added that tariffs were also increasingly being seen as a tool of force. “It can be a way for the US to essentially use force when it doesn’t want to use its military,” Rajan said. He cautioned that the outcome is often that “other countries suffer. When asked if India had been targeted more harshly than other Asian nations, Rajan agreed. “It is. I think there’s no true questions about that, he said.

He explained that India was initially in discussions to be placed in the same tariff category as other Asian countries, with rates of around 20%. We would look different, and we would be on a level playing field. Of course, there was a hope that the special Modi-Trump relationship would yield something even better. But at least we would not look worse if that had played out, Rajan said.