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April 11, 2025 • Twitter.com/easterneye
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Rachel Reeves spoke to her counterparts
in Canada, Australia, Ireland, France,
Spain and the European Union. She also
held talks with India’s finance minister
Nirmala Sitharaman this week as the two
sides discuss a free trade agreement.
Speaking in parliament, the chancellor
said Trump’s tariffs would have huge im-
plications for the world economy, as seen
in global markets this week.
She reiterated her comments that Brit-
ain would keep all options open in terms
of how it responds to tariffs, but said it did
not want to create more trade barriers.
“This morning, I spoke to the governor
of the Bank of England, who has con-
firmed that markets are functioning ef-
fectively and that our banking system is
resilient,” Reeves MPs.
Discussing how the government would
respond, she said: “All of the decisions
that we make as a government will be
underpinned by the stability of our non-
negotiable fiscal rules”.
Experts and industry stakeholders
have pinned hopes on bilateral trade
agreements with the US and its trade
partners to offset negative impacts of tar-
iffs. They said nobody is a winner in a
trade war.
Olivia O’Sullivan, director, UK in the
World Programme, at Chatham House, a
UK-based thinktank, said it appeared that
the UK had swerved the worst treatment
this week via a strategy of “flattery and
offering concessions.”
She told Eastern Eye, “There’s little
predictability in Trump’s approach, no
indication the UK was given any specific
‘discount’, and the wider effect of these
tariffs on the global economy are still
likely to substantially affect the UK.
“There is no clarity about how the
Trump administration arrived at the fig-
ure or why they see their 10 per cent rate
as ‘reciprocal’ as a result.
“Even if the direct hit on the UK is rela-
tively lower, this volatility will affect the
country, because it will likely affect con-
sumer and investor confidence, global
prices, and trade. Countries which are
affected will face higher prices, and these
will likely be passed on to UK consumers
and businesses via global supply chains.
And, if the tariffs hurt economic growth in
key markets, then the wider global eco-
nomic slowdown will affect Britain.
“The UK may have avoided the worst in
direct tariffs, but the wider hit to eco-
nomic certainty and trust is significant.”
On a potential UK-US trade deal,
O’Sullivan, said, “A strategy of seeking a
bespoke deal with the US may yet pay off
and may have broadly put the UK in the
‘least-worst’ category this time around,
but this does not mitigate against the
wider effects on the global economy of
Trump’s approach. The UK has few op-
tions though, and may need to continue
to try to balance its relations with the US,
Europe and China.
“The volatility of the Trump adminis-
tration means it is difficult for the UK to
appeal to the US when it is not clear what
the US’s economic goals currently are. A
strategy of emphasising the UK’s own
relatively balanced trade with the US may
not have a lasting effect – while the Trump
administration suggests they seek to
‘punish’ countries buying less from the
US than they sell.
She added, “The UK is stuck with an
unpredictable negotiating partner, and
while it can try to win exemptions, it still
needs to plan to use other growth levers
to offset the potential effects of tariffs.
This could include seeking a better trade
relationship with the EU, or deepening
ties with other key trade partners.
“The UK may yet secure a trade or sec-
tor-specific deal with the US, but given
the Trump administration’s tendency to
revisit and rewrite deals even Trump se-
cured in his first term, there are limits to
the benefits and certainty the UK might
secure from any given deal.”
India reacted cautiously last Thursday
(3) to Trump’s sweeping tariffs, with the
government saying it was examining both
“implications” and “opportunities” from
the duty hikes.
Trump, speaking while unveiling the
tariffs at the White House the previous
day (2), said India’s prime minister Nar-
endra Modi was a “great friend”, but that
he had not been “treating us right”.
India’s Department of Commerce said
last Thursday it is “carefully examining
the implications of the various measures”.
It also added in a statement that it was
“studying the opportunities that may
arise due to this new development”, a
likely reference to regional competitors
being hit harder.
An initial White House chart revealing
the tariffs listed India at 26 per cent, but
an annexe cited by New Delhi put the du-
ties at 27 per cent.
Indian exporters said they were disap-
pointed and relieved in equal measure.
Ajay Sahai, director general of the Fed-
eration of Indian Export Organisations,
said the tariffs on India were higher than
expected and would hurt export demand.
But Sahai also pointed out that India
was hit with lower levies than manufac-
turing rivals.
“Many countries which we compete
with globally, including China, Indone-
sia, and Vietnam etc, have been hit hard-
er than us,” he said.
“That opens up space for us to gain in
terms of market share. But at the same
time, if more countries retaliate and global
trade gets hurt, this isn’t good for anyone.”
According to the Global Trade Re-
search Initiative (GTRI), the US decision
to impose a 26 per cent reciprocal tariff
on India could lead to a decline of $5.76
billion (£4.42bn), translating into a 6.41
per cent contraction in exports to Wash-
ington in 2025.
The contraction will be led by a drop in
exports of fish, which may fall by a fifth,
followed by iron and steel; dia-
monds, gold; vehicles and parts; electri-
cal, telecommunications, and electron-
ic products.
In 2024, India exported $89.81bn
(£68.88bn) worth of goods to the US.
A White House fact sheet said pharma-
ceutical goods would be exempt from the
reciprocal tariffs, providing relief to an
Indian industry that shipped more than
$8bn (£6.2bn) in exports to the United
States in the 2024 fiscal year.
Indian Pharmaceutical Alliance secre-
tary general Sudarshan Jain said this
showed “the critical role of cost-effec-
tive, life-saving generic medicines in
public health, economic stability and na-
tional security”.
Trump’s tariffs are the single biggest
disruptor in world order since the second
World War, according to Dr VK Vijayaku-
mar, chief investment strategist at Geojit
Financial Services Limited, an India-
based brokerage firm.
“The curious case is that the US has
imposed tariffs on its friends and part-
ners, including Canada, Mexico and the
EU. The tariff calculation itself is flawed.
Trump imposed a 26 per cent tariff on
India, however, a UN report last year said
the average tax on US goods imported to
India is just 17 per cent.”
Vijayakumar added, “One thing the US
president missed is that the US economy
is 68 per cent consumption based. With
the tariffs, the prices of almost every
product would go up, which ultimately
will lead to inflation. When the economy
slows down, the country will experience
stagflation, which is indeed a dangerous
situation for not only the US, but across
the world.”
He said, “India started trade talks with
the US two months ago. It will take another
two-three months to finalise. So, the un-
certainty regarding tariffs will continue.”
Agneshwar Sen, trade policy leader at
EY India, told Eastern Eye, “For India, the
additional tariff places it in the lower half
of targeted countries, creating opportuni-
ties beyond traditional export sectors like
engineering goods, electronics, gems and
jewelry, textiles, and apparel.
“The tariffs could also shift competi-
tiveness in India’s favour in sectors where
other regional exporters are more se-
verely impacted. To maximise this advan-
tage, India must not only negotiate with
the US to maintain market access, but al-
so collaborate with free trade agreement
(FTA) partners in Asia to restructure sup-
ply chains and seize new opportunities.
Alex K Ninan, vice president of the
Seafood Exporters Association of India,
told Eastern Eye, “The industry got badly
affected by the tariff announcement. As
many as 35 per cent of seafood exports
from India goes to the US. We will have to
find alternative markets in Europe, Japan,
and South Korea.”
He added, “A major issue we are facing
now is that Ecuador, which is India’s big-
gest competitor in the sector, faces only a
10 percent tariff. So, India’s right to a level
playing field is now gone with the 26 per
cent tariff imposed on us. This will ad-
versely affect our seafood exports, espe-
cially shrimp exports.”
“I was part of a delegation which met
with the central government about these
tariffs this week,” Ninan added.
“The ministry informed us that talks
are ongoing regarding a bilateral trade
agreement with the US. India hopes that
in two to three months’ time, there will be
clarity on the discussions.” (with inputs
from agencies)
‘UK stuck with an unstable partner’
ANALYSTS SAY TRUMP’S VOLATILITY AND UNCLEAR GOALS POSE CHALLENGE IN TALKS
AGENDA: Sir Keir Starmer (centre) and Rachel Reeves (right)
speak to workers at a Jaguar Land Rover factory on Monday
(7) in Birmingham; (inset below) Starmer (third from left) chairs
a business roundtable at Downing Street last Thursday (3)
A WAVE of anxiety has gripped
India’s diamond polishing hub of
Surat, as hefty US tariffs threaten
to undermine the country’s gem
and jewellery exports, putting at
risk the livelihoods of thousands
of workers.
The US, which takes more
than 30 per cent of the south
Asian nation’s gem and jewellery
exports, set a 26 per cent recip-
rocal tariff on it last Thursday
(3), at a time when demand is
softening in other key markets
such as China, the Middle East,
and Europe.
“Tariffs will hit hard the de-
mand for diamonds in the Unit-
ed States and job losses look in-
evitable, at least in the short
term,” said Dinesh Navadiya,
chairman of the Surat-based In-
dian Diamond Institute.
Surat, the second-largest city
in Gujarat, the western home
state of prime minister Naren-
dra Modi, processes and polishes
more than 80 per cent of the
world’s rough diamonds, and In-
dia accounts for nine in every 10
diamonds processed globally.
Business has ground to a halt
in its teeming diamond market,
where more than 10,000 traders
and brokers gather each day, as
the industry tries to figure out
how matters will evolve in the
coming months.
Conditions are worse than
during the 2008 financial crisis,
when the industry was plagued
by fears of a prolonged recession,
said Mansukh Mangukiya, a dia-
mond trader for five decades.
A slowdown in the industry
will hit all manufacturers, but
smaller players will suffer most,
said Sevanti Shah, chairman of
Venus Jewels, adding, “Many
smaller manufacturers will have
no choice but to shut down.”
The US accounted for nearly
$10bn (£7.67bn), or 30.4 per
cent, of India’s annual gems and
jewellery exports, totalling $32bn
(£24.5bn) in 2023-2024.
Gems and jewellery are India’s
third largest export to the US, af-
ter engineering and electronic
goods, and employ millions of
workers, including artisans.
Poorer business prospects also
raise questions about the future
of the Surat Diamond Bourse, in-
augurated by Modi in 2023 to
create thousands of new jobs
and serve as a trade hub.
Built over 6.6 million square
feet, it was touted as the world’s
largest office building, surpass-
ing the Pentagon.
The industry will seek alterna-
tive markets to compensate for
the loss of US demand, but no
other country will be able to re-
place the US market, diamond
dealers said.
The sudden decline in US de-
mand would require short-term
production adjustments within
the industry and could lead to
reduced rough diamond imports,
said Shaunak Parikh, vice chair-
man of the Gem and Jewellery
Export Promotion Council.
Exporters are making last-
minute efforts to ship as much as
possible to the US before its new
tariffs take effect, Parikh said,
while orders that cannot be de-
livered earlier may be cancelled
or put on hold.
The tariffs will also drive up
US prices, crimping demand,
said Vipul Shah, managing direc-
tor of Asian Star, a leading dia-
mond exporter.
An uncertain future lies ahead
for Chetan Navadiya, a diamond
manufacturer turned job-work
contractor. “I lost my business
due to the market slowdown,”
Navadiya said. “I took up job
work to survive, but even those
contracts may not come by now,
because of US tariffs.”
Paresh Parekh, partner and re-
tail tax leader, EY India, said “In-
dian gems and jewellery sector
has been already struggling since
last few years due to changing
customer preferences, lab grown
diamond technology, demoneti-
sation, soaring gold prices, and
competition for polishing from
other countries. The US tariff de-
velopments now create addition-
al adverse impact on the sector,
with real risk of job losses and
margin erosions.
“The exposure to US or this
sector is huge. Till now, India’s
tariffs on gold jewellery imports
are around 20 per cent which is
higher than US import tariff (five
per cent plus). The US levied
earlier nil tariff on cut and pol-
ished diamonds while India lev-
ies five per cent. The sector
hopes India covers this sector in
its negotiations for trade deal
with the US.”
© Kirsty Wigglesworth/WPA Pool/Getty Images
© Ben Stansall/WPA Pool/Getty Images
Fears mount over future of India’s diamond hub
FADING
SPARKLE:
The US has
set a 26 per
cent tariff on
Indian gem
and jewellery
exports
© Punit Paranjpee/AFP via Getty Images