What Trump’s India Tariffs Mean for Global Trade

Summary

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WSJ What’s News – August 27, 2025

Episode: "What Trump’s India Tariffs Mean for Global Trade"

Host: Azhar Sucri
Guest(s): Tripti Lahiri (WSJ South Asia Bureau Chief), Jinju Lee (WSJ "Heard on the Street" Columnist)

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Episode Overview

This episode explores the consequences of President Trump’s newly enacted, steep tariffs on Indian goods, delving into their impact on India’s export-focused industries, the global supply chain, and the broader context of US-India trade negotiations. The episode also touches on Trump's move to replace Fed Governor Lisa Cook, the ongoing shake-up in US subsidies for renewable energy, and other business headlines.

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Key Discussion Points & Insights

1. Trump’s Move to Replace Fed Governor Lisa Cook

• [01:01] President Trump aims to oust Fed Governor Lisa Cook and quickly announce a replacement.
  • Top contenders: Stephen Myron (Trump’s economic adviser and prior Fed nominee), David Malpass (former World Bank President, Trump ally, and Fed critic).
  • Lisa Cook objects, arguing Trump lacks authority and hinting at legal action.
  • Quick court battles may ensue.

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2. US Tariffs on Indian Goods: What Happened and Why

• [01:39] Background: Initial 25% tariffs were established in early August due to stalled trade negotiations; a further 25% was added due to India's Russian oil purchases, totalling 50%.
• [02:50] Tripti Lahiri: Indian businesses believed closer US relations under Trump would benefit them, especially as companies pursued a “China plus one” strategy.
  • Optimism faded due to unresolved trade talks and unrelated political disputes (e.g., US-India disagreement over ceasefire negotiations with Pakistan).
  • Quote:

    “Everybody had looked at Trump’s presidency as being a good thing for India, that he would focus his trade war on China... but a lot of things happened... There may have also been fallout from the India-Pakistan conflict.”
    — Tripti Lahiri [02:50]

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3. Tariffs’ Economic Impact on India and Global Supply Chains

• [03:52] Which goods get hit?
  • Labor-intensive exports hardest hit: apparel, shrimp, rough diamonds, leather shoes, carpets.
  • “Roughly 2/3 of India’s $90B of exports to the US now subject to the 50% tariff.”
    • Exports could drop by $30–40 billion—a major blow to India.
  • Quote:

    “What’s particularly concerning for India is that... a lot of those exports are focused in areas that are kind of labor intensive... one estimate is the exports to the US drop by 30 or $40 billion and that’s going to be a big hit.”
    — Tripti Lahiri [04:00, 04:35]

• [04:45] Global ripple effects:
  • Multinational manufacturers weighing whether it’s worth shifting supply chains to India.
  • Smaller or tentative firms may abandon plans to move out of China because the tariff advantage fades.
  • Regional rivals like Bangladesh and Vietnam may benefit (apparel tariffs only ~20%).
  • Not all sectors are affected: Pharmaceuticals, electronics (e.g., Apple iPhones), and services (IT/finance) are largely exempt from tariffs.
  • Quote:

    “There are lots of exemptions... pharmaceuticals, electronics… Apple has shifted lots of iPhone assembly work to India and that is not going to be affected. And the last thing that isn’t affected is services in general.”
    — Tripti Lahiri [05:42]

  • The measure primarily targets goods, not services.

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4. Renewable Energy Subsidy Rollback

• [07:09] Trump's rollbacks leave wind and solar stocks lagging behind fossil fuel competitors.
• [07:54] Jinju Lee: Despite short-term pain, mature renewables industry can compete without subsidies, and scrapping complex tax credits could simplify investment.
  • Quote:

    “Getting rid of that subsidy structure might actually make the financing process for solar and wind easier and more straightforward... and possibly even open up more investors.”
    — Jinju Lee [08:10]

• [08:34] Short-term forecast: 23% fewer new wind, solar, and storage installations through 2030 (Bloomberg NEF).
• [08:52] Long-term prospect remains positive due to rising electricity demand (AI, electrification of transport/buildings).
  • Renewables’ edge: Fast project timelines.
  • Quote:

    “Electricity demand is starting to rise for the first time in a while... The distinct advantage that solar and wind have is that they take a shorter time to build.”
    — Jinju Lee [08:52]

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5. Quick Business Headlines

• [09:26] ExxonMobil held secret talks with Russia’s Rosneft about reviving a major oil project if a Ukraine peace deal is reached and both governments agree.
• [09:56] SpaceX successfully test-launched the Starship rocket after setbacks, deploying dummy Starlink satellites.

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Memorable Quotes & Moments

• Tripti Lahiri on Indian business reaction:

  “Many Indian businesses are asking… everybody had looked at Trump’s presidency as being a good thing for India, that he would focus his trade war on China and US-India ties would improve...”
  — [02:50]

• Tripti Lahiri on labor-intensive sectors:

  “So it could be apparel manufacturing, it could be shrimp farms, it could be finishing rough diamonds, making leather shoes and carpet weaving...”
  — [04:00]

• Jinju Lee on renewables becoming more resilient:

  “Wind and solar are no longer the new technologies… they’ve been competitive with natural gas… getting rid of that subsidy structure might actually make the financing process for solar and wind easier...”
  — [07:54, 08:10]

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Most Important Timestamps

• [01:01] Trump seeks a new Fed nominee, legal standoff with Lisa Cook
• [02:50–06:19] Deep dive: Why the US-India trade deal failed, who is hurt by the tariffs, supply chain impacts
• [07:09–09:26] Columnist Jinju Lee on the renewables market without subsidies
• [09:26–09:56] Quick takes: ExxonMobil’s secret Russia talks, SpaceX Starship launch

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Tone & Language

The episode maintains WSJ’s characteristic analytical and factual tone, with direct commentary from experts. The reporting is clear, precise, and business-focused, conveying both immediate consequences and broader context with neutrality and detail.

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For listeners or readers, this episode offers a concise yet comprehensive analysis of Trump’s India trade tariffs, their domestic and international impact, and what it signals for global manufacturers and energy markets.

Transcript

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[Azhar Sucri]

President Trump wants to quickly replace Fed Governor Lisa Cook. We'll look at the candidates he's considering. Plus, as punishing tariffs on Indian goods come into effect, we discuss what that means for businesses.

[Tripti Lahiri]

What's particularly concerning for India is that Even though the US has perhaps about 20% of overall exports out of India, a lot of those exports are focused in areas that are kind of labor intensive. One estimate is the exports to the US dropped by 30 or $40 billion. That's going to be a big hit to India.

[Azhar Sucri]

And how bad is Trump's rollback of green subsidies for the renewables industry? Our columnist's take might surprise you. It's Wednesday, August 27th. I'm Azhar Sucri for the Wall Street Journal. Here is the AM edition of what's news, the top headlines and business stories moving your world. Today, we report that President Trump has told advisers he wants to move quickly to announce a nominee to replace Lisa Cook, governor he's trying to oust. Trump told reporters yesterday that he's thinking of tapping Stephen Myron, a close economic adviser. He's already nominated him to fill a different seat on the Fed's board, but Cook's seat has a longer term, according to people familiar with the matter. Another potential candidate is former World Bank Group President David Malpass, a close ally of Trump's who has criticised the Fed for not cutting interest rates. Trump is also preparing for a potential fight in the courts, as Cook has said the president doesn't have the authority to fire her and threatened legal action. Steep US Tariffs on a range of Indian products have kicked in today after a deadline to strike a deal came and went. An initial 25% tariff on Indian goods came into effect in early August, but earlier this month, President Trump signed an executive order imposing an additional 25% tariff due to India's purchases of Russian oil, bringing the combined levy to 50%. The Journal South Asia bureau chief Tripti Lahiri is here to tell us more. Tripti A few months ago, India appeared to be in pole position to strike a deal with Trump. So how did we get here?

[Tripti Lahiri]

Azhar I think that's exactly the same question many Indian businesses are asking in India. Everybody had looked at Trump's presidency as being a good thing for India, that he would focus his trade war on China and India, and US Size would improve, and that would be good for Indian businesses as well, including those businesses that would be part of a US Supply chain as part of some companies. China plus one strategy. That's the strategy where companies were trying to diversify out of China. But a lot of things happened. One is that the two countries just simply couldn't agree on a trade deal, despite there seeming to be momentum at one point. Another thing is that it seems like the two countries perhaps fell out on things that had nothing to do trade. One of those things is the India Pakistan conflict, where President Trump announced that he had brokered a ceasefire between India and Pakistan, while India said repeatedly that that had been negotiated directly. And some political experts think that perhaps that hasn't gone over so well with the White House.

[Azhar Sucri]

So give us an idea of the range of goods that are attracting the new 50% rate. Who's going to be hit the hardest here?

[Tripti Lahiri]

Lots of businesses. And what's particularly concerning for India is that Even though the US is perhaps about 20% of overall exports out of India, a lot of those exports are focused in areas that are kind of labor intensive. So it could be apparel manufacturing, it could be shrimp farms, it could be finishing rough diamonds, could be making leather shoes and carpet weaving. So areas that employ a lot of people. So one analysis I've seen from a trade research firm here, GTRI estimates that perhaps the 2/3 of India's $90 billion worth of exports to the US are going to come under this 50% tariff. And if so, there could be a dramatic reduction in exports to the U.S. one estimate is the exports to the U.S. drop by 30 or $40 billion, and that's going to be a big hit to India.

[Azhar Sucri]

So what are the ripple effects likely to be across global trade? For example, what does this mean for manufacturers who are looking to get out of China?

[Tripti Lahiri]

It depends a lot what business you're in, and also maybe how long range you're looking and how much you've invested. I think for lots of businesses that were maybe starting to dip their toe into India, or there may be smaller businesses, they may see this and say, at one point it looked like I might get a 20 percentage point benefit from going over to India, and that would make it worthwhile to go through the pain of shifting. If it's going to be just a few percentage points difference. It doesn't really make it worthwhile to shift out of China. So a lot of people are considering whether if there's tariffs everywhere, maybe I stay in China for some kinds of things. The competitors that India was already looking at, say Bangladesh, Vietnam for apparel, they're continuing to look pretty good. They're at around 20%. So it makes lots of sense to keep doubling down on that strategy if that was your China plus one strategy. And you know, in all of these trade tariffs, one thing is that there are lots of exemptions, so it's really hard to get a full picture of everything that's going on. But there are exemptions for pharmaceuticals, which are a big share of India's exports to the U.S. there are also exemptions for electronics. So for example, Apple has shifted a lot of iPhone assembly work to India in recent years and that is not going to be affected. And the last thing that isn't affected is services in general. So far, Trump has really focused on goods. India does export a lot of technology and financial services around the world, including to the U.S. but those so far are not on his radar.

[Azhar Sucri]

South Asia Bureau chief Tripti Lahiri, thank you very much.

[Tripti Lahiri]

Thank you for having me.

[Azhar Sucri]

Coming up, SpaceX pulls off a successful launch for its Starship rocket after a series of setbacks. Plus, we have the scoop on ExxonMobil's secret talks with Russia. Those stories and more after the break.

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[Azhar Sucri]

Conditions appreciate the renewable energy industry was left rattled earlier this summer when Trump's Big beautiful bill ended subsidies for both wind and solar power. Stocks of renewable developers have underperformed The S&P 500 so far this year, marking a stark contrast to nuclear and natural gas heavy power producers like Constellation Energy and Vistra, which are trading at steep premiums. However, WSJ Heard on the street columnist Jinju Lee says it's not all doom and gloom for wind and solar, arguing that the rollback in subsidies is a shock the industry can absorb.

[Jinju Lee]

So wind and solar are no longer the new technologies that they were when they first started receiving subsidies. They've been competitive with natural gas, fire generation for at least the past decade. And the other thing to note is that tax credits, while they are generous, are a very sort of complicated form of subsidy to use for developers. And so getting rid of that subsidy structure might actually make the financing process for solar and wind easier and more straightforward going forward and possibly even open up more investors.

[Azhar Sucri]

There will be some short term pain. Bloomberg NEF estimates that there will be 23% fewer new wind, solar and energy storage installations through 2030 than if the tax and spending bill hadn't passed. But Jinju says the long term outlook favors renewables.

[Jinju Lee]

Electricity demand is starting to rise for the first time in a while, and it's not just driven by AI. It's also just the broad shift from fossil fuels to electricity on things like cars and building heating. The distinct advantage that solar and wind have is that they take a shorter time to build. And speed is really important for some of these AI applications. So that sets up wind and solar really well.

[Azhar Sucri]

In other business news today, we are exclusively reporting that ExxonMobil held secret discussions this year with Russia's biggest state energy company, Rosneft. The talks were about the US Oil giant resuming work on a massive project in Russia. If both governments approved this as part of a Ukraine peace deal, enticing Exxon back would represent a coup for the Kremlin. But its return depends in part on whether President Trump succeeds in brokering an end to the Ukraine war or instead tightens sanctions on Moscow. And SpaceX has pulled off a successful test launch of its Starship rocket. The spacecraft flew through space and deployed a batch of dummy Starlink satellites yesterday, marking a rebound for Elon Musk's rocket after a series of explosions and mishaps during test flights. And that's it for what's news for this Wednesday morning. Today's show was produced by Kate Bullivant and Daniel Bark. We had additional help from Roya Shahidi. Our supervising producer was Christina Rauca. I'm Azhar Sucri for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.

[Tripti Lahiri]

Sam.