US President Donald Trump has escalated his criticism of India, branding its economy as “dead” and lumping it with Russia’s, prompting an oblique rebuttal from commerce minister Piyush Goyal who told Parliament that India was a “bright spot” in the global economy.
In a flurry of messages on social media, Trump also announced a trade deal with Pakistan but offered no clue on how much duty the country will pay. He boasted that American companies would develop a “massive” oil reserve in Pakistan and this might be sold to India some day.
Trump is to sign an executive order implementing the decisions later in the day.
US treasury secretary Scott Bessent said the US President and his trade negotiators were “frustrated” at the tardy progress of talks with India, which “came to the table early” but was found to be “slow rolling things”.
After announcing, on Wednesday, 25 per cent tariffs on India and an unspecified penalty for buying oil and defence equipment from Russia, Trump took to the Truth Social platform on Thursday morning (India time) to continue his tirade.
“I don’t care what India does with Russia. They can take their dead economies down together, for all I care. We have done very little business with India, their Tariffs are too high, among the highest in the World,” Trump posted.
“Likewise, Russia and the USA do almost no business together. Let’s keep it that way….”
However, in the absence of any executive order, Trump’s social media comments remain only a threat on paper, and the Narendra Modi government has prudently avoided any direct confrontation with the US President.
On the deal with Pakistan, Trump posted: “We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive Oil Reserves. We are in the process of choosing the Oil Company that will lead this Partnership. Who knows, maybe they’ll be selling Oil to India some day!”
Goyal, in a statement made on his own in both Houses of Parliament, assured members that India would take “all necessary steps to secure and advance national interest”.
As the Opposition used Trump’s comments to accuse the government of failing to protect the national interest, Goyal pledged to protect farmers and small businesses.
Goyal said the Centre was receiving feedback from all stakeholders and exporters to assess the situation. He said India had committed in talks with the US to reach a bilateral trade agreement, and noted that five rounds of talks had taken place and a sixth was scheduled in August.
The minister stressed that India had emerged as the fastest-growing large economy, contributing 16 per cent of the global growth. He said international institutions and economists saw India as a “bright spot” in the global economy that was on its way to becoming the world’s third-largest economy from the fifth position it held now.
While the impact of Trump’s threat will only be known once the executive order is published, economists suggested that it could shave off 0.3 to 0.5 per cent of India’s growth this year. The Reserve Bank of India has forecast a 6.5 per cent GDP growth for the economy in financial year 2025-26.
Trump’s comments sent the rupee plunging to a record low of ₹87.74 to a US dollar before recovering to close the day at ₹87.58.
The imposition of US sanctions on six Indian companies on Thursday morning (India time) for trading in Iranian oil and petroleum products added to the uncertainty and fear in the marketplace.
The stock market slumped in the opening stages of the day, reacting expectedly to Trump’s overnight comments, but recovered partly by the end of the day with the Sensex closing at 81,185, down by 296 points.
Trump also announced a trade deal with South Korea, which “will give to the United States $350 Billion Dollars for Investments owned and controlled by the United States, and selected by myself, as President”.
“Additionally, South Korea will purchase $100 Billion Dollars of LNG, or other Energy products and, further, South Korea has agreed to invest a large sum of money for their Investment purposes…,” he posted.
“It is also agreed that South Korea will be completely open to trade with the United States, and that they will accept American product including Cars and Trucks, Agriculture, etc. We have agreed to a Tariff for South Korea of 15%. America will not be charged a Tariff.”
