Coin Press - India defies U.S. tariffs

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India defies U.S. tariffs

When Washington decided to double tariffs on Indian goods in mid‑2025, many analysts predicted a serious blow to New Delhi’s export‑led ambitions. The new duties – raising effective rates to 50 % and applying to a broad range of merchandise – were justified by the United States as a response to India’s purchases of discounted Russian crude and long‑standing trade imbalances.

Yet the effect so far has been counter‑intuitive. India has retained its position as one of the world’s fastest‑growing major economies. Provisional figures show gross domestic product expanding at an annualised 7.8 % in the April–June 2025 quarter, the fastest in five quarters and well above market forecasts. Gross value added, regarded as a better measure of underlying activity, grew 7.6 %, while private consumption – which accounts for nearly 60 % of output – rose 7 %. These gains have encouraged officials to predict full‑year growth close to 7 %, and the statistics office now projects 7.4 % for the 2025/26 fiscal year.

Trade tensions and political rhetoric
The tariff escalation marks the sharpest turn in U.S.–India commerce since the Trump administration’s early complaints about India’s high import barriers. What began as a push to narrow America’s trade deficit quickly widened into a broader confrontation: Washington demanded easier market access, higher visa fees and curbs on H‑1B immigration, while New Delhi defended its right to buy Russian oil and declined to join Western sanctions. When U.S. officials linked Moscow’s invasion of Ukraine with bilateral trade talks, they imposed an extra 25‑percentage‑point surcharge over the existing 25 % tariff. President Donald Trump used social media to label India a “dead economy,” arguing that the United States did little business with a nation he said was overly protected. Such rhetoric belied the depth of bilateral ties: India remains a key defence partner for Washington, and the two countries signed a ten‑year defence cooperation framework last year.

Why India’s growth holds up
Several factors explain why punitive tariffs have not derailed growth. First, India’s economy is driven far more by domestic demand than by exports. Private consumption has been buoyed by rural spending, demand for durable goods and tax relief measures. Government spending rose 7.4 % in the June quarter after contracting in the previous period. The manufacturing sector expanded 7.7 %, a sharp improvement on the previous quarter, and services – spanning trade, hotels, transport and finance – posted a robust 9.3 % increase. Agriculture also contributed, growing 3.7 % after a strong sowing season. Collectively, these drivers more than offset the early effects of higher U.S. duties.

Second, Prime Minister Narendra Modi’s government has pursued reforms that underpin domestic resilience. Officials cut personal income taxes and announced forthcoming consumption‑tax reductions to stimulate spending. Labour and consumer‑tax overhauls came into force in 2025, improving compliance and investment conditions. Authorities are also front‑loading capital expenditure on infrastructure and offering targeted support to sectors most exposed to foreign tariffs, such as textiles and leather. These measures, along with monetary policy that keeps real interest rates supportive, have helped sustain household and corporate confidence.

Third, India has diversified its trade relationships. While U.S. tariffs threaten around 55 % of the country’s $87 billion of goods exports to America, exporters have been quick to court alternative markets. New Delhi is negotiating free‑trade agreements with the United Kingdom and the European Union and has concluded pacts with Australia and the United Arab Emirates. Bilateral deals in South‑East Asia and Latin America have opened new routes for manufacturers of automobiles, pharmaceuticals and electronics. Even where tariffs bite, such as in Mexico – which recently raised import duties on non‑FTA partners to up to 50 % – Indian negotiators are pursuing country‑specific exemptions. The government has also stepped up outreach to African and Middle‑Eastern economies, leveraging its successful Group‑of‑Twenty presidency to deepen investment ties.

The risks ahead
Economists still warn that the full impact of the U.S. tariffs has yet to be felt. Exporter groups estimate that 50 % duties could shave 0.6 to 0.8 percentage points off India’s growth over a year. With nominal GDP growth already slowing to 8.8 % in the June quarter – its lowest in several years – corporate profits and tax revenues may come under pressure. Currency markets have reflected these concerns: the rupee touched a record low against the dollar following the tariff hikes, while equity indices sagged. There are also structural challenges. The European Union’s Carbon Border Adjustment Mechanism, set for full implementation in 2026, will impose new reporting obligations and costs on steel, aluminium and cement exporters, potentially eroding their competitiveness. Meanwhile, Mexico’s broad tariff increases threaten to disrupt a fast‑growing destination for Indian automobiles and components.

Another concern is private investment. Capital expenditure rose 7.8 % in the June quarter, but analysts say many firms are deferring large projects pending clarity on global trade rules. Although official forecasts point to 7 % annual growth, the Reserve Bank of India expects a moderation as the tariffs take full effect and global demand slows. To sustain momentum, India will need to accelerate structural reforms, improve labour‑market flexibility and expand production incentives under its “Make in India” programme.

A contest of narratives
The commercial clash between Washington and New Delhi is as much about narrative as economics. U.S. officials portray the tariffs as leverage to obtain market access and influence India’s foreign policy. Indian leaders characterise them as an unfair attempt to “crush” a rising power, and they point to the country’s 1.4 billion‑strong market and digital‑economy boom as evidence of enduring strength. In truth, the clash underscores a shifting global order. As China’s growth slows, investors and governments are reassessing supply‑chain dependence and seeking alternatives. India’s ability to deliver near‑8 % growth despite trade headwinds highlights its potential as a manufacturing and services hub. Yet the dispute also exposes vulnerabilities: a heavy reliance on imported oil, a still‑nascent export base and an under‑developed logistics system.

For now, India’s economy is soaring even as one of its most important partners raises barriers. Whether this resilience can be sustained will depend on how quickly tariffs bite, how successfully New Delhi diversifies its trading partners and whether domestic reforms continue apace. The coming year will reveal whether the world’s fastest‑growing major economy can stay on course amid rougher commercial seas.

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Stargate project, Trump and the AI war...

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When NASA’s Artemis II crew splashed down in April 2026 after looping around the Moon, it rekindled interest in human spaceflight. The United States had not sent astronauts near the lunar surface in more than half a century, and its return came amid an unmistakable rivalry with a rising power. Over the last decade China has methodically tested rockets, landers and rovers, assembled its own orbital outpost and dispatched missions across the Solar System. The world’s two largest economies are now openly competing to build a permanent human presence on and around the Moon, to harvest its resources and to set the standards that will govern space for decades to come.Although the race evokes memories of the Cold War, experts stress that today’s contest is more complex. Rather than a sprint to plant a flag, the current competition is a marathon to establish infrastructure and routines for sustained exploration. 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In 2024 China launched 68 orbital rockets, second only to the U.S., and is testing reusable boosters and powerful new engines. It is also pursuing a Mars sample‑return mission that could bring material back to Earth by 2031, potentially beating NASA’s delayed Mars campaign. Observers say these achievements reflect an ecosystem that now rivals the U.S. in breadth, even if China still lags in private sector innovation and reusable rocket technology.Why 2027 mattersThe year 2027 stands out as a make‑or‑break point in the unfolding space competition. For NASA, the planned in‑orbit docking demonstration will show whether its architecture—combining the Orion crew capsule with privately built lunar landers—can actually work. This test has already been inserted into the Artemis sequence as a separate mission, and without it the agency cannot risk sending astronauts to the lunar surface. 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The momentum could position Beijing to attempt its first crewed lunar landing by the end of the decade, perhaps just a year or two after Artemis III.The symbolic stakes of who returns to the Moon first resonate beyond space professionals. Many commentators see access to lunar resources such as water ice and helium‑3 as future economic boons, enabling fuel production, life support and even fusion energy. Others worry that these expectations could inflame geopolitical tensions and lead to the partition of the lunar surface. Online discussions are filled with references to science‑fiction series like For All Mankind and Star Wars, a sign of how popular culture shapes perceptions of space. Some people lament the absence of Europe in the high‑profile contest, expressing frustration that the European Space Agency is not competing at the same level. Others note that the proliferation of mega‑constellations could spoil the night sky for astronomy and raise the risk of collisions. A common thread is the belief that space is becoming another arena for geopolitical rivalry and that humanity must balance exploration with responsibility.What’s at stakeAt the heart of the new space race is a struggle over norms and infrastructure. The country that first establishes a sustained presence on the Moon will likely influence how lunar resources are allocated, how safety zones are defined and how future claims are adjudicated. China’s plan for an International Lunar Research Station is open to partners but would be led by Beijing and Moscow, while the U.S. promotes the Artemis Accords, a set of principles signed by more than thirty nations that emphasise transparency, peaceful use and the protection of heritage sites. The two frameworks represent competing visions of governance. Some analysts worry that parallel bases could harden rival blocs and complicate cooperation on scientific projects.Economic motives also loom large. The Moon’s south pole contains ice deposits that can be split into oxygen and hydrogen for rocket fuel; its regolith may hold helium‑3, a potential fuel for fusion reactors; and rare earth elements could be mined for electronics. Companies envisage extracting these materials and using them to support lunar factories, orbital refineries and interplanetary missions. Observers point out that many of these prospects are speculative and that the technological and legal challenges are formidable. Nevertheless, the prospect of a trillion‑dollar space economy drives investment from governments and venture capital. Commentators on social media often joke about “all those beautiful minerals” and wonder whether space will become a battlefield for humans. Others warn that competition could trigger an arms race, with anti‑satellite weapons and military platforms turning Earth orbit into a contested zone.Environmental concerns add another layer of complexity. Mega‑constellations of thousands of satellites enable global internet and Earth‑observing services, but they also contribute to light pollution and radio interference that hamper astronomical research. Critics argue that launching tens of thousands of spacecraft to benefit a small fraction of the population is not worth degrading the natural beauty of the night sky. Campaigners call for international regulation to ensure that orbits remain sustainable and that debris is removed. The U.S. Federal Communications Commission and international bodies are beginning to address these issues, but enforcement remains weak.Beyond the U.S. and ChinaWhile the rivalry between Washington and Beijing dominates headlines, other actors are shaping the space landscape. India, which landed a spacecraft near the lunar south pole in 2023, plans its own crewed missions and has an eye on lunar resources. Russia remains formally involved with China’s lunar base plan despite its own economic struggles. Private corporations across the globe are developing lunar landers, communications relays and space‑based manufacturing. Even as the European Space Agency grapples with funding and policy issues, European companies supply critical hardware, such as the service module for Orion and lunar lander technology. Japan, Canada and the United Arab Emirates are all planning missions that will contribute to lunar exploration or the construction of the Lunar Gateway, a planned station in lunar orbit.Taken together, these efforts suggest that the future of space will be multipolar. The outcome of the 2027 milestones will not end the race but will set the trajectory for the coming decade. Whether the United States and China choose to cooperate or compete will influence how quickly humanity establishes a foothold beyond Earth and whether the benefits of space are shared or monopolized.An uncertain finish lineThe United States and China are already locked in a fierce competition for space. Both nations have articulated ambitious lunar roadmaps, invested billions in rockets, spacecraft and infrastructure, and rallied their citizens with promises of national renewal and scientific glory. Yet the space environment today is far more complex than during the Apollo era. Private companies wield unprecedented influence, environmental and legal questions remain unresolved, and the stakes extend from lunar ice to orbital broadband and planetary defence. The year 2027 will be a crucial inflection point: a successful docking test for Artemis and the continued pace of China’s Chang’e and megaconstellation programmes will signal whether each nation can execute its plans on schedule. Failure or delay on either side could alter perceptions of leadership and open space for newcomers.As the countdown to these milestones advances, policymakers, engineers and citizens alike grapple with what the space race means. Will it inspire cooperation and new frontiers of knowledge, or will it deepen divisions and militarize the heavens? Will the Moon become a laboratory for sustainable living or a quarry for minerals? And can humanity develop rules and norms to manage an increasingly crowded sky? The answers will emerge over the next several years. For now, the only certainty is that the competition is real, the challenges are immense and the outcome will shape the cosmic future of us all.