What Trump Means by Calling India a ‘Dead Economy’
Trump Imposes New Tariffs on India, Slams Trade Ties and Russia Link
August 1, 2025
Donald Trump’s comment referring to India’s economy as “dead” is not an economic assessment in the conventional sense but a political signal wrapped in hyperbole. Still, it reflects certain long-standing Western grievances about India’s economic posture, especially in trade and strategic alignment. His use of “dead” seems to be shorthand for what he views as a stagnant or closed economy that, in his mind, has failed to match up to its global potential or openness.
Just hours after announcing a 25 per cent tariff and penalties on Indian goods effective from August 1, Trump posted a statement on Truth Social criticising India's trade practices and its ties with Russia. “I don’t care what India does with Russia. They can take their dead economies down together, for all I care. We have done very little business with India, their Tariffs are too high, among the highest in the World. Likewise, Russia and the USA do almost no business together. Let’s keep it that way, and tell Medvedev, the failed former President of Russia, who thinks he’s still President, to watch his words. He’s entering very dangerous territory!”
From an international economic standpoint, especially among American and European business communities, India’s economy is often seen as frustratingly protective – to protect local producers and businesses by making imported goods more expensive or harder to access. Tariff barriers, or import taxes, remain high in several sectors, particularly automobiles, electronics and agriculture. On average, India’s tariffs are above 17 per cent, which is one of the highest rates in the world for a big economy.
Western firms have often found it difficult to do business in India because of unclear rules, frequent policy reversals and slow judicial redress in trade disputes. Trump’s statement about high tariffs reflects longstanding criticism from American businesses that India wants access to foreign markets but restricts access to its own.
Although trade between India and the U.S. has grown over the past two decades, Trump sees the relationship in purely transactional terms. If the U.S. buys more from India than India buys from the U.S., and India still makes it hard for American goods to enter its market, he sees that as unfair, even if the overall relationship is improving or has political value.
From a Western geostrategic perspective, Trump’s irritation also stems from India’s continuing trade and defence ties with Russia. India has maintained a neutral or independent stance on the war in Ukraine, continued oil imports from Russia and refrained from joining sanctions led by the West. This has raised discomfort in Western capitals, where governments expected democratic countries to align more closely with the NATO bloc against Russia.
Calling the Indian economy “dead” also reveals a perception, not uncommon in some Western political circles, that India has failed to deliver the kind of large-scale investment and trade openings that were anticipated in the post-1991 liberalisation period. India is often talked about as a country with a young population and strong growth prospects, but foreign investors still face slow processes, unpredictable rules and trouble getting their profits out. Countries like Vietnam, Indonesia and Mexico are now seen by many as more dependable for setting up supply chains, especially after the pandemic and rising tensions between the U.S. and China.
Trump’s language, though coarse, may resonate with sections of the Western business world that are disillusioned with India’s economic promises. For over a decade, multinational corporations have spoken of India as the next China, yet per capita income, infrastructure quality and manufacturing scale remain well below expectations. The gap between ambition and delivery has created fatigue among some investors, particularly those who entered the Indian market expecting swift returns.
Another layer to Trump’s statement is that it reflects the political mood in the West, where talk of protecting local jobs and industries from global competition has become more popular. By criticising India’s high tariffs and downplaying its economy, Trump presents himself as standing up for American workers against what he describes as unfair treatment by other countries. What makes this more striking is that India has also been taking a similar path in recent years – promoting self-reliance and encouraging local production over foreign imports. So even as both countries accuse each other of being unfair, they are each pulling back from open trade in similar ways.
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