In a candid analysis at a recent forum here, former Reserve Bank of India Governor Raghuram Rajan downplayed Russia's discounted oil as the primary reason behind President Donald Trump's imposition of steep 50% tariffs on Indian exports. Instead, Rajan spotlighted a diplomatic clash over credit for brokering a ceasefire between India and Pakistan earlier this year, underscoring how personal egos and narratives can sway major trade policies.​

The tariffs, announced amid escalating US-India trade frictions, hit sectors like textiles and seafood hard, but Rajan argued the root cause traces back to May's brief India-Pakistan conflict sparked by a terrorist attack in Pahalgam. Trump publicly took credit for the truce, earning quick praise—and even a Nobel nomination—from Pakistan. India, however, maintained it resulted from direct military talks, irking the White House and prompting the punitive measures. Pakistan, by contrast, faced only a 19% tariff hike, which Rajan quipped showed they "played Trump the right way."​

Rajan brushed aside speculation around India's ramped-up Russian oil imports post-Ukraine war, noting Trump has ignored similar moves by Hungary without reprisal. "Russian oil wasn't the central issue," he emphasized, urging India to reassess if these bargain buys truly net economic gains when refiners reap most rewards. This view aligns with his earlier warnings on energy diplomacy, where he questioned long-term benefits against geopolitical costs.​

As India navigates these tariffs—potentially costing exporters billions—Rajan called for pragmatic engagement to restore balance. With Trump prioritizing "America First," emerging markets like India must blend energy security with savvy alliance-building, much like Vietnam's pivot during US-China tensions. Businesses are already bracing for margin squeezes, watching for any signs of negotiation breakthroughs.