US Tariffs on India: Why Experts Say American Consumers Pay the Price

Experts Warn: Trump's Tariff Threat a Self-Inflicted Wound for US Economy

AP

President Donald Trump's recent suggestion of imposing steep new tariffs on imports from India has triggered sharp responses from trade experts and industry leaders. While the threat appears aimed at leveraging political support, particularly among the US farming community, analysts argue that escalating duties on Indian goods, such as rice, are more likely to result in painful inflation for American consumers than meaningful pressure on New Delhi's exporters. Simply put, experts contend the US is not doing India a "favour" by purchasing its specialty products; it's fulfilling an undeniable market need.

The Economics of US-India Trade: A Demand-Driven Reality

The core argument against the efficacy of tariffs lies in the US-India trade relationship. For specific, high-demand products, American market absorption is not merely transactional, but necessity-driven.

Distinct Flavour, Indispensable Role

In the case of Indian Basmati rice, which was specifically mentioned by Trump, exporters stress that the market operates purely on demand. Varieties like Basmati and certain non-Basmati strains offer a distinct flavour, texture, and cooking profile that American-grown rice simply cannot replicate.

"The US market's rice imports are entirely demand-driven," explains a prominent trade analyst. "The American consumer, especially those supporting Indian and South Asian cuisines, requires these specific commodities. To suggest a local substitute is like arguing apples are the same as oranges. India is not dumping product; it is filling a gourmet niche."

Who Pays the Price? The Burden on American Households

Crucially, experts note that tariffs are ultimately taxes paid by the importing country's consumers. History shows that previous rounds of tariff hikes imposed by Washington did little to deter Indian exports, instead forcing US importers to absorb the higher costs, which were then passed directly to the American public.

Price Hikes and Domestic Inflation

The result? The rising duties have been entirely borne by the US consumer, contributing directly to domestic food inflation.

The Global Trade Research Initiative (GTRI), a leading Indian trade think tank, observed that American households depending on these specialized Indian rice varieties would be the primary victims of any new duties, facing even higher prices in the US retail market. Therefore, any steep increase in US tariffs will be detrimental to the US consumer itself and will have a minimal impact on robust Indian trade flows, which are buoyed by strong global demand.

Policy or Populism? The Political Context

Many analysts view President Trump’s warning as a political maneuver designed for domestic consumption rather than a serious blueprint for policy change. Announced alongside discussions of a new farm relief package, the tariff threat is likely intended to reassure American farmers in an election cycle that the administration is focused on promoting US agriculture.

As the GTRI states, "Trump threatens to impose high tariffs on Indian rice. But the threat is politics, not policy." For now, while the rhetoric may rattle the markets momentarily, the fundamental economics suggest that the ultimate burden of any new tariff war will land squarely on the US consumer’s plate.