US President Donald Trump has threatened to impose 25% tariffs on countries doing business with Iran. This is aimed at increasing pressure on Iran. No official order has yet been issued regarding these tariffs, but if implemented, it could affect India as well.
The first impact has been seen in crude oil prices. Following the news, Brent crude prices rose above $64 a barrel, the highest level since November. India buys most of its oil from abroad, so an increase in oil prices can lead to an increase in petrol and diesel prices. This has a direct impact on the common man's pocket, inflation and the country's economy.
Will trade with Iran have to be reduced?
The total annual trade between India and Iran is less than $4 billion dollars. India exports rice, tea and medicines to Iran. Experts believe that due to its strong ties with the US, India cannot risk an additional 25% US tariff on these limited exports. This means that India may be forced to reduce trade with Iran.
India's biggest concern is Iran's Chabahar port. The port is located on the southwestern coast of Iran and is India's main gateway to Afghanistan and Central Asia. India operates the port under a long-term contract. The US granted him a six-month embargo, which was valid until April. However, it is not clear whether this exemption will be effective once the new tariffs are implemented.
What was India's response?
India has not responded to Trump's decision. Relations with the US are important to India, so the Modi government's approach is likely to be cautious and balanced. The tariffs could also affect China, as it is Iran's largest trading partner and oil buyer. However, experts believe that Trump may avoid disturbing the existing trade balance with China.
Will the tariff issue be resolved?
Importantly, the US Supreme Court may soon decide whether Trump has the authority to impose such tariffs under the IEEPA Act. If the court upholds this, the whole issue may be put to rest.
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