‘Gun to your head’: Raghuram Rajan says Trump made Russian oil fight with India toxic
Rajan acknowledged India maintains steep tariffs in some sectors, but said both sides have a case. U.S. exporters face hurdles in India, while Indian farmers compete with heavily subsidized American agriculture and lack a social safety net.
- Aug 12, 2025,
- Updated Aug 12, 2025 10:20 AM IST
Former RBI governor Raghuram Rajan blasted Donald Trump’s new 50% tariff on Indian goods, warning it’s like negotiating “with a gun to your head” and risks long-term damage to U.S.-India ties.
In an interview with Valor International, Rajan said the tariff move marks a sharp reversal from the warmth displayed when Prime Minister Narendra Modi visited Washington earlier this year. Trump’s decision, similar to measures against Brazil, is being justified as a response to India’s high import barriers and its continued purchases of Russian oil.
Rajan acknowledged India maintains steep tariffs in some sectors, but said both sides have a case. U.S. exporters face hurdles in India, while Indian farmers compete with heavily subsidized American agriculture and lack a social safety net. “The mistake was thinking this would be a patient negotiation toward a fair agreement, rather than one side saying: ‘Here’s what you’re going to give me,’” he said.
On Russian oil, Rajan argued halting imports “wouldn’t be a disaster” economically, but the political optics of bowing to U.S. pressure make it a harder sell domestically. Linking the issue publicly to tariff threats, he added, “makes it much harder politically.”
The former central bank chief warned that the tariffs could render much of India’s $80 billion in U.S. exports unviable, while also hitting $40 billion in American exports to India — some produced by U.S. firms in India.
He dismissed BRICS as an incoherent bloc and said a common currency was “virtually no chance” of success. An alternative payment system might emerge, but would likely be dominated by China’s currency.
Rajan said the time for a united response to U.S. tariffs had passed, as major economies like Japan, the EU, and the UK have already secured their own arrangements. The bigger global threat now, he warned, is not high tariffs but their volatility. “If today it’s 50% tariffs on one set of countries and tomorrow another, uncertainty will keep disrupting trade and investment,” he said. “Stability is essential — and that’s in the shortest supply right now.”
Former RBI governor Raghuram Rajan blasted Donald Trump’s new 50% tariff on Indian goods, warning it’s like negotiating “with a gun to your head” and risks long-term damage to U.S.-India ties.
In an interview with Valor International, Rajan said the tariff move marks a sharp reversal from the warmth displayed when Prime Minister Narendra Modi visited Washington earlier this year. Trump’s decision, similar to measures against Brazil, is being justified as a response to India’s high import barriers and its continued purchases of Russian oil.
Rajan acknowledged India maintains steep tariffs in some sectors, but said both sides have a case. U.S. exporters face hurdles in India, while Indian farmers compete with heavily subsidized American agriculture and lack a social safety net. “The mistake was thinking this would be a patient negotiation toward a fair agreement, rather than one side saying: ‘Here’s what you’re going to give me,’” he said.
On Russian oil, Rajan argued halting imports “wouldn’t be a disaster” economically, but the political optics of bowing to U.S. pressure make it a harder sell domestically. Linking the issue publicly to tariff threats, he added, “makes it much harder politically.”
The former central bank chief warned that the tariffs could render much of India’s $80 billion in U.S. exports unviable, while also hitting $40 billion in American exports to India — some produced by U.S. firms in India.
He dismissed BRICS as an incoherent bloc and said a common currency was “virtually no chance” of success. An alternative payment system might emerge, but would likely be dominated by China’s currency.
Rajan said the time for a united response to U.S. tariffs had passed, as major economies like Japan, the EU, and the UK have already secured their own arrangements. The bigger global threat now, he warned, is not high tariffs but their volatility. “If today it’s 50% tariffs on one set of countries and tomorrow another, uncertainty will keep disrupting trade and investment,” he said. “Stability is essential — and that’s in the shortest supply right now.”