Former Reserve Bank of India Governor Raghuram Rajan has cautioned India to prepare for the enduring presence of US tariffs, despite President Donald Trump's Republican Party experiencing a significant defeat in the November 3 midterm elections. Rajan, currently a finance professor at the University of Chicago's Booth School of Business, advised against expecting a swift or substantial rollback of American trade restrictions.
Why US Tariffs Are Here to Stay
Speaking to Nidhi Razdan on DeKoder, Rajan emphasized that a change in congressional control does not guarantee an end to existing trade barriers. "We shouldn't expect miracles that suddenly overnight tariffs will come down to zero," he stated, noting that the Democratic Party has historically not been opposed to tariffs. He cited the Biden administration's decision to maintain tariffs on China, indicating a bipartisan willingness to use such measures.
Rajan argued that businesses and nations must adapt to this higher-tariff environment rather than anticipate a complete reversal of policy. While a new political balance in Washington might curb some of the more aggressive, unilateral trade decisions, the administration retains considerable power to implement tariffs without full congressional approval. He suggested that greater oversight could, however, reduce the likelihood of sudden, extremely steep tariffs against individual countries.
India's Experience with US Trade Measures
India has faced significant trade tensions with the United States, particularly after the Trump administration imposed tariffs of up to 50% on Indian goods in August 2025. Initially, a 25% tariff was levied on Indian imports, followed by an additional 25% penalty due to New Delhi's continued purchases of Russian oil. These measures, which took effect in August 2025, severely impacted bilateral trade relations.
The additional 25% tariff linked to Russian oil was eventually removed in February 2026. Furthermore, both countries announced a framework aimed at lowering reciprocal tariffs to 18%. In a related development, the US Supreme Court ruled on February 20 that the International Emergency Economic Powers Act (IEEPA) did not authorize the president to impose tariffs, leading the administration to rely on other trade laws to maintain import duties.
Rajan's message is clear: India and its businesses need to "learn to live with this level of tariffs from the United States" as it is unlikely to be a major priority for future administrations to dismantle them.