13

Nov

Washington cannot be trusted, says Raghuram Rajan

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Dr Satish Misra

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New Delhi | Friday | 14 November 2025

Former Reserve Bank of India governor Raghuram Rajan has said that Trump’s Washington cannot be trusted and has questioned the Modi–Trump friendship in the backdrop of the ongoing tariff war between India and the US.

Pointing out at the Washington’s double standards for imposing steep tariffs on Indian goods while offering Pakistan lower rates, Rajan underlined that the US’s trade actions contradict the supposed warmth in ties between the two leaders.

“Where is the much-extolled friendship between US President Donald Trump and Prime Minister Narendra Modi when the US can slap a 50 per cent tariff on India but impose only 19 per cent on Pakistan?” Rajan asked, posing a question at an event hosted by the Chicago Council on Global Affairs on November 6.

The former RBI governor, who was removed by Prime Minister Narendra Modi, said the move had left India “very disappointed” and showed that “the US cannot be trusted.”

“I think India was getting closer to the United States over the last 20 years and it is very disappointed. I'm not talking about leadership.  I'm talking about people who get hit with this tariff. I don’t mean to rub salt on the wound – at the same time Pakistan has a tariff rate of 19 per cent, India has 50 per cent. Where is the friendship between Modi and Trump that was extolled? It's a slap in the face for Modi because the Indian opposition is asking him ‘where's your friendship?’” eminent economic expert Rajan underscored.

Article at a Glance
Former RBI Governor Raghuram Rajan criticized the U.S. for its “double standards” in trade policy and questioned the credibility of the Modi–Trump friendship amid steep U.S. tariffs on Indian goods. Speaking at the Chicago Council on Global Affairs, Rajan highlighted that while Pakistan faces only a 19% tariff, India is burdened with 50%, calling it a “slap in the face” for India and proof that Washington “cannot be trusted.” Citing historical examples like the 1971 Indo-Pak war, Rajan said U.S. policies have often favored Pakistan, straining India’s trust. He added that India’s foreign policy is constrained, with limited options due to tense relations with China. Rajan warned that the high tariffs hurt small and medium Indian exporters and could permanently damage trade relations. He also urged India to be cautious in future U.S. trade deals, particularly in the heavily subsidized agriculture sector.

US-based Rajan argued that India could not be the most tariffed country in the world—“more than China”—while Washington continued to talk about “military friendship and alignments and joint manoeuvres and so on.” He said such actions tend to linger in people’s minds.

“The US cannot be trusted,” Rajan said, recalling that “in the 1970s (former US President Richard) Nixon and (former Secretary of State Henry) Kissinger tilted the US towards Pakistan in the Indo-Pak War in 1971. They sent the seventh fleet to stop the war, to help Pakistan. Indians were very miffed at that, and the Soviet Union helped India. That put India in the Soviet camp for 25 years,” he noted, adding that it took considerable time for India to move out of that alliance.

Pointing out to the limited foreign policy options of the Modi government, Rajan said that India may not fall back on China given the present relation between the countries.

“India doesn't have a lot of other places to go, shares a border with China, has fought one serious border war and a bunch of skirmishes with China. India is suspicious of China. It's also very worried about Chinese goods coming and swamping India. It's happy for Chinese investment but it wants to be a little careful about becoming dependent on China,” he said explaining the difficulties that India faces today.

Highlighting contradictions in the Modi government’s foreign policy, the former RBI governor further noted that although India maintains good ties with Japan, Australia and other Quad nations, it “wants to build a relationship with Washington” and was “left very disappointed that this has not become transactional.”

Rajan also explained how the 50 per cent tariff had uneven effects across industries.

“There are companies like Apple that can persuade the administration and get waivers, which means it might not be hugely impacted. But then there are smaller companies that are not finding it sustainable to sell their products in the US for a 50 per cent tariff,” he said.

“Those relationships once disrupted are hard to build back because somebody else has taken up the slack in Bangladesh or Vietnam and so it's something that will have costs. It's typically small and medium enterprises that will bear that cost and the longer this lasts the more it becomes a permanent rupture,” Rajan added.

Earlier in July this year, Rajan had forewarned saying that India needs to be “very careful and clever” while negotiating trade agreements with the US, especially with regard to the agriculture sector, which is heavily subsidised by developed countries.

Rajan had said that India’s economic growth had sort of settled in the range of 6-7 per cent, and a fraction of percentage point might be affected by the global trade uncertainties. “I think where it is much more sort of difficult (trade negotiations) is in areas such as agriculture, where every country subsidises its producers and our producers may be relatively smaller, may have somewhat lower subsidies...unconstrained flow of agricultural products into the country may create problems for them,” he said.  (Dr Satish Misra is a senior journalist and a seasoned political analyst. He has been a Senior Fellow at the Observer Research Foundation )

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