LEILA FADEL, HOST:
China's summit comes just a few days after a federal appeals court ruled that Trump's liberation day tariffs are unlawful. The judges allowed the tariffs to remain in effect until at least mid-October in anticipation of the administration appealing to the Supreme Court. So how much of a factor are those import taxes, plus even higher tariffs because of India buying Russian oil, in reshaping India's foreign policy. Joining us now to discuss is economist Devashish Mitra. He's a professor at Syracuse University and specializes in international trade and the Indian economy.
Good morning, and thank you for being on the program.
DEVASHISH MITRA: Thank you, Leila. Good morning.
FADEL: How significant are these U.S. tariffs, totaling 50% for India's economy?
DEVASHISH MITRA: They're very significant because the estimates are that it will shave off about 1% of India's GDP, and the projected growth rate was about 6.5% for next year. It could go down to about 5.5% or even lower as a result of the tariff. So they are pretty significant for India. India exports a lot of labor-intensive manufacturers like apparel, textiles, footwear, jewelry, etc., to the United States. On the other hand, India's main exports to the U.S. are services, and services don't get impacted by these tariffs, and it's very difficult to put tariffs in services. But on the other hand, it's quite likely that President Trump will restrict H-1B visas and other temporary work visas on which services exports rely. So this is really significant.
FADEL: And how are they being received? I mean, does India have any leverage to push back against the tariffs?
DEVASHISH MITRA: So India has had a huge geopolitical importance within the region. India is - has a population of 1.4 billion, and it's a large democracy next to China, which has a similar population, a bigger economy, but it is not a democracy. So India was, you know, one of U.S.' strong allies in the region and was a counter to China. So it's going to make a huge difference.
FADEL: So could these tariffs shift those alliances in that dynamic? I mean, 'cause India has historically...
DEVASHISH MITRA: Yes.
FADEL: ...Tried to...
DEVASHISH MITRA: Yeah. I think the tariffs have already started pushing India towards China. And, you know, there have been statements made on both sides that - so, for example, China's ambassador said that China opposes Washington's steep tariffs on India and will firmly stand with India. You know, Prime Minister Modi has - is visiting China for the first time in seven years and going to this - and he is at the Shanghai Cooperation Organisation Summit, which is of huge significance. You have President Xi there, but also President Putin, who's there. You know, Iran's head of state is there and lots of other...
FADEL: Right.
DEVASHISH MITRA: ...High-profile leaders are attending the summit.
FADEL: And as you mentioned, the size of India's population and its relationship historically with the U.S., it was seen - India was seen or considered a counterweight to China in Asia.
DEVASHISH MITRA: Yes.
FADEL: After what you just described, I mean, does that still hold true?
DEVASHISH MITRA: No, it doesn't hold true because India is being - India feels singled out now. India has been - basically, there's an extra 25% tariff, 25 plus 25, which makes it 50, and that extra 25% tariff is because - they're saying it's because India is buying Russian oil, and they're putting pressure on India not to buy Russian oil. But there are many other countries that buy Russian oil. China buys more Russian oil, and then the U.S. buys uranium, palladium and fertilizers from Russia.
FADEL: Devashish Mitra is an economics professor at Syracuse University. Thank you for your time and your insights.
DEVASHISH MITRA: Thank you. Transcript provided by NPR, Copyright NPR.
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