Economic Security and Resilience Review

This issue focuses on President Trump’s announcement of new ‘reciprocal’ tariffs governing imports into the US for various countries that will come into force from August 7, and the major bilateral “deals” which preceded that announcement.

In the event, negotiations with India could not be closed and President Trump unilaterally announced on July 30 a reciprocal tariff rate of 25% with effect from August 7, along with an unspecified penalty for buying oil and defence equipment from Russia. Deals concluded during the month were with Vietnam, Philippines, Indonesia, Japan, the European Union, Republic of Korea, Pakistan and Bangladesh.

Broadly speaking, while countries with which the US had a goods trade surplus have been given a 10% tariff, and countries with which US had a trade deficit have been given tariff rates ranging from 15% to 41%. Countries that arrived at a deal with the US got off with relatively lower levels within this band. Brazil, largely for political reasons, has been accorded a 50% tariff.

The signing of the India-UK FTA on the occasion of PM Modi’s visit to the UK is another highlight covered in this issue. Announcement of a ten year bilateral ‘Vision’ statement and initiatives on critical minerals and technology were other significant features of this visit. 

PM Modi’s visits to attend the BRICS summit and to several mineral-rich countries during the month again included several aspects impinging on economic security and resilience, which have been highlighted in this report.

Similarly, in the meeting between EAM Dr. S. Jaishankar and Chinese Foreign Minister Wang Yi, during the former’s visit to Beijing in July, issues relating to the introduction of export restrictions on critical minerals and magnets by China were taken up.

At a rather tense summit meeting with China, the EU Commission President Ursula Von der Layen termed the imbalances in EU-China trade as having reached an ‘inflection point’. In contrast, the EU-Japan summit presented a picture of convergent interests in developing joint approaches towards both strengthening multilateralism as well as strengthening and diversifying supply chains in critical minerals. 

Other developments covered in this issue include the announcement of a political agreement reached between Indonesia and the EU on their bilateral FTA, the 18th package of sanctions announced by the EU against Russia that also targets an Indian oil refinery partly owned by Russia’s Rosneft, and President Trump’s warnings about secondary tariffs on Russian oil imports.

To read this issue of the ESRR, Vol. III, Issue 7, please see the PDF attached