The White House announced in early August that it imposed high tariffs on India because of India’s continued purchase of Russian oil. Tariffs for affected Indian products are approaching all-time highs. New Delhi responded quickly and released a counterlist covering multiple fields such as agricultural products, fuels, consumer goods and luxury beverages. At this time, Modi has planned to attend a multilateral summit focusing on economic and security cooperation at the end of the month, which instantly adds to the meaning of diplomatic game: the smoke of the economic war has not yet dissipated, and the diplomatic meeting is about to begin.

Tariff wars are essentially economic sanctions. Behind the seemingly boring numbers are naked political tools that can not only put pressure on opponents, but also explain to the domestic people. The U.S. move is intended to warn India and show its determination to safeguard American interests to domestic voters. India needs to take into account the interests of farmers and the development of its own industrial. The trade volume between the two countries is huge, and hard measures by either side will cause significant losses. Investment bank analysts warned that the continued tariff war will curb India’s manufacturing growth, which is by no means an alarmist statement.

Many people mistakenly believe that moving factories to India means complete autonomy, which is too ideal. Machines and factories are easy to relocate, but key processes, hidden technologies and experience accumulation are difficult to replicate in a short period of time. Especially in experience-dependent links such as screen color adjustment, camera module debugging, equipment parameter fine adjustment, etc., the experience of veteran engineers is crucial and directly affects the yield rate. Recently, some well-known foundries have withdrawn hundreds of Chinese engineers back to India, causing the operation of local production lines to be blocked.

In the short term, India can only seek alternatives, such as hiring Taiwanese technicians or speeding up local talent training, but this will take time and money. A decline in production efficiency and yield rates will force brands to reevaluate their investment layout in India.