Trumps Tariffs and the Question of National Interest

Deepak Sinha

The 19^th Century British Statesman and Prime Minister, Lord Palmerston’s, famously said “Nations have no permanent friends or allies, they only have permanent interests”. Over time this reasoning ostensibly came to be seen as the lynchpin of how every nation should conduct its foreign policy. It is what professors teach in universities, diplomats swear by, and analysts theorise over on media channels and in newspapers in their attempts to make sense of machinations of other Nation States.

However, one need not be a communist or leftist to understand that this principle is only practiced when the nation’s permanent interests coincide with that of its elites. Put another way, what elites see as in their interest are always promoted as national interest. That is what the politician is paid to ensure, unless ofcourse he or she belongs to the elite. Unfortunately, the problem arises when interests diverge, and actions, while benefiting the elites, causes pain to the man or woman on the street. The politicians then, tend to get the rough end of the stick!

For instance, take the case of Trump’s penal tariff’s on us, presently planned at 50% and set to take effect from the 27^th August, unless he has a change of heart. These sanctions have ostensibly been applied against us because the crude oil we purchase from Russia, at discounted rates, apparently allows the Russian war machine to continue with its attacks against Ukraine. Needless to say, this action against us is hypocritical, not least because trade between the United States and Russia also continues apace, apart from the fact that the EU and US buy most of the products derived from this crude at refineries here. Nonetheless, he who pays the piper calls the tune, and so like it or not, here we are preparing to dance to Trump’s tune.

The MEA justifies the Government’s move by stating these “imports are meant to ensure predictable and affordable energy costs to the Indian consumer. They are a necessity compelled by global market situation….. In this background, the targeting of India is unjustified and unreasonable. Like any major economy, India will take all necessary measures to safeguard its national interests and economic security”.

Our Government would have us believe that this discounted purchase of crude oil from Russia benefits the average consumer. If that were indeed wholly true, then our refusal to get bullied by Trump and confront him, with all the pain that it entails, would be the right thing to do. While the question of price stability may have some merit, but to suggest that it has been done to ensure the Indian consumer benefits is simply hogwash. The facts suggest something very different, and in any case if this were so, our fuel prices would have seen a decline, but have instead remained unchanged. This is because, in its infinite wisdom, the Central Government has allowed two-thirds of our purchases to be picked up by our friendly neighbourhood oligarchs, who then refine and resell it to the West at gargantuan profits.

The remainder one-third goes to state owned companies, which allows the government to claim “national interest”, as the profits they make can be legitimately used to subsidise government spending, apart from stabilising prices as the government claims. Alternatively, the Prime Minister could look to tightening the Government’s belt, especially his own penchant for foreign travel and the expenses incurred therein. A total of 336 days involving an expenditure of approximately Rs 3500 Crores from the time he took over as Pradhan Sevak till July 2025 by some conservative estimates.

That notwithstanding, the Government’s actions do raise some questions. Firstly, would not 100% of that oil being picked up by our state- owned companies provide the Government with more flexibility when price stability is the focus? Secondly, why this penchant for helping out private companies at the cost of state-owned ones? After all, even if they were purchasing oil at market rates, all things being equal, their profits would have probably only seen a slight dip, resulting in their shareholders earnings being marginally less.

Undoubtedly, these penal tariffs will adversely impact our MSME’s, as the goods we export will become relatively costly, allowing suppliers from other countries to steal a march over us. That in turn will hurt business sentiments, company bottom-lines and jobs etc. All of which amounts to the average citizen being further squeezed economically, which raises the question why do we buy Russian oil if the ordinary citizen has to bear the brunt of the penalty imposed? As it is, some studies in the public domain suggest the average citizen already accounts for 80% of all direct and indirect taxes collected, while corporates contribute just 20%. This is, to say the least, completely unfair.

Indeed, if national interest were to be equated with what eases the burden of the man or woman on the street, then, clearly the purchase of Russian oil doesn’t cut it. If this realisation were to strike the Modi Government, would it be willing to intercede on our behalf with Trump to stop the penal tariffs from kicking in? Obviously, this would imply stopping the purchase of Russian oil, for which the opposition would publicly accuse it of caving to American bullying.

Undoubtedly, this Government now finds itself between a rock and a very hard place. What would be really interesting to see is how would it respond if our elites decide that the purchase of Russian oil is hampering their business interests in the United States and the West and want it stopped? Clearly, the Modi Government needs a diversion to draw attention away from our economic travails and the grave errors being unearthed regarding the functioning of the Election Commission that seem to be delegitimising the BJP’s victory at the hustings in 2024.

Could this be the reason that Mr Modi now raised a clarion call from the ramparts of Red Fort about large scale infiltration and how infiltrators are taking over our property and jobs? I do not quite believe those at the receiving end will be fooled that easily.