India Gets Tariffs, Pakistan Gets Oil As Trump Deals With Epstein Heat

US president Donald Trump loves to have the last word. Besides, of course, the first word, the middle word and every other word in-between. At the time of writing this, officials of the Indian government are keeping mum on Trump’s post on his social media site, Truth Social, in which he said he is levying a tariff of 25% on India, as well as an unspecified penal levy for buying Russian oil and weapons.

There is the possibility that Trump could swallow a portion of the 25% tariff he has announced, and, in his last word on the subject, settle for a lower rate, such as the 15% he has imposed on the European Union, Japan and South Korea.

India can live with tariffs, whatever the level. But it would be totally unacceptable to let the US or any other power dictate to us on who we should buy weapons from and what kind. Trump’s animus against India was not spent with the declaration of high regular and penal tariffs.

After finalising a trade deal with Pakistan, whose army chief had been hosted at the White House a month ago, after Operation Sindoor, Trump made another post on Truth Social, saying the US would help Pakistan develop its huge oil reserves, and perhaps Pakistan would start selling oil to India.

He prefaced this jibe with “I don't care what India does with Russia. They can take their dead economies down together, for all I care.” Does he mean it? He need not bother to levy any penal duty for India and Russia entering into a suicidal pact that makes no difference to him. Whether this social media post amounts to walking back his earlier penal duty announcement or not is unclear at the moment. At some point, he will deign to clarify the matter. Provided he does not get caught up in the Epstein maelstrom.

Trump’s Epstein Nightmare

Jeffrey Epstein, master procurer of underage girls for a rich clientele, had been a friend of Trump’s. After being found out, prosecuted, and jailed, Epstein had died, allegedly by suicide, although some crucial minutes of jail CCTV footage had mysteriously gone missing to create uncertainty about how precisely he died.

Epstein lives on in ultra-conservative Republican circles as an embodiment of Democratic sins. Trump’s MAGA base has held that some important Democrats figure in the Epstein court documents, and that the government has been shielding them by refusing to make public the entirety of the Epstein files.

During his election campaign, Trump had promised to declassify the Epstein files and make them public. Trump has not fulfilled this election promise. After a Wall Street Journal story that said Trump had presented Epstein with a bawdy figure that Trump had sketched on his 50th birthday, and that Trump figures in the Epstein files, Trump has said that some parts of the Epstein files would be released. He has also sued the Wall Street Journal and its owner, Rupert Murdoch.

Trump has been so rattled by the Epstein allegation that he has tried to divert public attention, linking Barack Obama to Russian interference in his 2016 election, and threatening to arrest Obama. An official of the Justice Department was sent down to interview Epstein’s jailed associate, the socialite Ghislaine Maxwell, found guilty of helping Epstein groom young girls. The high drama over tariffs in the run-up to his August 1 deadline for finalising the tariffs also helps to keep Epstein out of the headlines.

Powel Refuses To Budge

Jerome Powell has once again chosen to ignore Trump’s direction to bring down policy interest rates, keeping rates unchanged at Wednesday’s meeting of the Fed’s Open Market Committee, where policy rates are set. The Fed sees the US economy holding steady, with inflation still well above the target rate of 2% and future tariffs threatening to push up the rate of inflation higher. Two members of the FOMC disagreed with the decision to put off rate cuts.

The US financial media speculates that such unusual public division within the FOMC might actually be being stage-managed by Powell, to make the point that when the rates are eventually cut, it would be the result of internal opinion, rather than of presidential pressure.

Trump and his ally Israel prime minister Benjamin Netanyahu, are increasingly isolated in delaying a political solution to the suffering in Gaza. European countries now threaten to recognise a Palestinian state, with France at the forefront. Experts on genocide, most of them Jewish, describe what is transpiring in Gaza as genocide. New Delhi, it should be noted, has been shifting its position on the ongoing slaughter in Gaza from wishy, on one occasion, to washy, on another.

Ditch American Tech?

Erstwhile Essar Oil, now Nayara Energy, in whose ownership Russian capital plays a major role, both via the oil giant Rosneft and via Russian private equity, underwent disruption of services recently, as a suite of software from Microsoft used to run the company’s operations stopped working. This, it turns out, was a fallout of the West’s decision to tighten sanctions against Russia.

Microsoft wound up its withdrawal of services soon enough, after being sued by Nayara, and Nayara has withdrawn its case against Microsoft. But the question remains as to how reliable American software is for Indian companies.

Consider an unlikely scenario. Some senators, acting on behalf of American weapon peddlers, move a piece of legislation in the Senate, seeking to limit the access of Indian entities to American software, because India buys arms from Russia. The administration signals it could not care less. Since the sale of Russian missile defence systems to India does not make America great again, a MAGA majority feels compelled to support the move.

Members of the Indian diaspora and the Indian embassy lobby against the bill. As a compromise, the proscription is limited to the pubic sector. Only the likes of Niti Aayog, Indian Oil and NTPC would see their power-points and spreadsheets malfunction. Fanciful? Yes. Impossible? Not in Trumpland. Should Indian companies ditch software from American tech giants and use software offerings from Indian companies? Probably.

Large non-banking finance companies (NBFCs) like Bajaj and Shriram report an uptick in the proportion of loans to small businesses that turn non-performing. This underlines the stress in parts of the economy, where cheer from happy Purchasing Manager Indices refuses to dispel the gloom. Public sector banks continue to rush in where NBFCs fear to tread, thanks to assorted government schemes.

The stock market is cushioned by loads of liquidity from around the world. The real economy has to brace for tough times.