Raghuram Rajan Says Trump 50% Tariffs A 'Wake-Up Call', India-US Relationship Has Clearly 'Broken Down'

(MENAFN- Live Mint) Raghuram Rajan, the 23rd Governor of the Reserve Bank of India (RBI), has reacted to the 50% tariffs imposed on India by the United States, calling them a“wake-up call” for the Indian government. Raghuram Rajan also said that the 50% tariffs indicate that the relationship between India and the US has“clearly broken down”.

“This is a wake-up call. Let us not become dependent on any single country to a large extent. Let us look east, to Europe, to Africa, and continue with the US, but unleash reforms that will help us achieve the 8–8.5% growth needed to employ our youth,” Raghuram Rajan said in an interview with India Today TV .

Raghuram Rajan added that India is at a disadvantage because the base tariffs have been set at 25%, while other Asian countries face much lower rates.

“The fact that the Indian tariffs have been set at 25, the base tariffs, even while other countries are much lower in Asia, makes India disadvantaged. So the relationship clearly has broken down.”

Also Read | Raghuram Rajan on 50% tariffs: 'Hard to negotiate with gun to head'

Explaining the reasons behind Donald Trump's tariffs on India, the former RBI governor said,“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.”

When asked if India has been singled out in Trump's tariff attacks on other countries, Raghuram Rajan said,“It is. I think there's no true questions about that.”

Raghuram Rajan also believes that the Trump tariffs are beyond any fairness and are more about power play.

“I think we are beyond issues of fairness, sovereignty, etc. We are talking about a situation where it is a power play,” he said. He continued,“It can be a way for the US to essentially use force when it doesn't want to use its military.”

On India's purchase of Russian oil, citing which Trump justifies the 50% tariffs, the former RBI governor said,“We need to ask who benefits and who is hurt. Refiners are making excess profits, but exporters are paying the price through tariffs. If the benefit is not large, perhaps it is worth considering whether we should continue these purchases.”

Earlier, Raghuram Rajan had suggested that India needs to be 'very careful and clever' while negotiating trade agreements with the US, especially with regard to the agriculture sector, which is heavily subsidised by developed countries.

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