US President Donald Trump says India has offered to cut its tariffs “to nothing” even as he called the current trade stalemate with the country “a totally one sided disaster”.

US tariffs of 50% on goods from India – which includes 25% penalty for Delhi’s refusal to stop buying oil from Russia – took effect last week.

India has not responded to Trump’s latest comment but such war of words over Russian oil has caused Delhi-Washington ties to hit an all-time low.

Trump’s comment coincides with Indian Prime Minister Narendra Modi attending the Shanghai Co-operation Organisation (SCO) summit in Tianjin where he met Chinese President Xi Jinping and Russian President Vladimir Putin.

Washington says Delhi has been indirectly funding Russia’s war in Ukraine.

“India buys most of its oil and military products from Russia, very little from the US,” Trump wrote, adding Delhi should have cut tariffs “years ago”.

Delhi has previously said that oil supply from Russia was vital to meet the energy needs of its vast population.

It has also called the tariffs “unfair, unjustified and unreasonable”.

Last week, the country’s commerce minister, Piyush Goyal, said India “will neither bow down nor ever appear weak” in its economic relationships with other countries.

He also said the country was ready to a have a free-trade agreement with anyone who wanted it.

On Monday, Trump wrote: “What few people understand is that we do very little business with India, but they do a tremendous amount of business with us. In other words, they sell us massive amounts of goods, their biggest “client,” but we sell them very little – Until now a totally one sided relationship, and it has been for many decades.”

The US was, until recently, India’s largest trading partner and the tariffs have sparked fears that exports and growth in the world’s fifth largest economy could suffer.

At the SCO summit, Modi was seen shaking hands with Putin ahead of a meeting hosted by Xi.

The SCO, whose members include China, India, Iran, Pakistan and Russia, is seen as a challenge to Trump and US dominance on a global level.

Putin and Modi later spent 45 minutes inside the Russian leader’s car – after which Modi posted a picture of their journey alongside the compliment to Putin.

The Indian PM said he had an “insightful” exchange with Putin.

As someone who has always been against austerity, I find France, with a national debt at 114% of GDP and a budget deficit of 5.8% of GDP, a conundrum. Despite years of denunciation from his left and far-right opponents that Macron has engaged in “ultraneoliberalism”, there hasn’t been any. Not on a macro level, anyway, where both French government spending (57.3% of GDP) and tax receipts (51.4% of GDP) are among the highest in the world, including social spending, which outpaces any of its European neighbours.

At the same time, it’s impossible to have spent the past decade in France without encountering the widely shared perception and accusation that public services are in decline. Doctors and nurses denounce a labour shortage in public hospitals; people who live in rural areas denounce the closing of rural train lines; students and academics denounce a lack of resources for public universities, many of which are dealing with outdated infrastructure, and for research.

Some of the responses to this aren’t strictly financial. Nearly every country in the world is dealing with a shortage of medical personnel, which in France has been exacerbated by caps on medical school admissions that were finally lifted in 2020. And over the past 25 years, France has seen an increase in urbanisation, from 76% to 82%. Maintaining the same level of transportation and other services to shrinking rural towns and villages would mean far higher spending per person than for those who live in cities, ultimately diverting resources from something (whatever, and wherever, that is) and raising a fundamental question of fairness. The French, for their part, see the downside to the concentration of policymaking in Paris and overwhelmingly want more decentralisation.

Nevertheless, somehow in a country that spends a greater percentage of its budget than any other on all of these areas combined, there’s not enough money for anyone, and most are – unlike their Nordic peers – to some extent, dissatisfied. And the debt and deficit, of course, spiral into unsustainable levels. What, then, is going on?

The far right blames immigration and promotes a spurious narrative that asylum seekers are to blame for the strain on social services and public resources. The centrist prime minister, François Bayrou, wants to nibble at the edges with cuts to everything, to find €44 billion a year in savings, culminating in the absurd proposal to do away with two public holidays (a self-destructive political act so outlandish that I originally, and wrongly, I guess, assumed it was only suggested to be sacrificed in figure negotiations). The left, for its part, somewhat more reasonably argues for taxing wealth, while in practice potentially extending the proposed tax increase even to people making over €20,584 a year and remaining unmoved by the legitimate complaint that self-employed workers, entrepreneurs, small business owners and startups are slammed by paperwork and the administrative costs of expanding.

In the midst of the disagreement over what to do about France’s finances – a debate that threatens to bring down the current French government when Bayrou holds a confidence vote on 8 September – almost nobody is having an honest conversation about the single largest component of the French government’s discretionary spending: the €211bn spent every year subsidising businesses to create jobs in a country where letting go of workers is difficult and costly, and where businesses are, as a result, hesitant to hire. France has created an unnecessarily rigid labour market (notice periods can reach up to two to three months), has ended up with an unemployment rate persistently higher than the EU average and salaries that are not progressing fast enough to keep anyone content, and spends €211bn (that is, more than on education) trying to compensate. If France instead pursued Danish-style “flexicurity”, how much of that €211bn might otherwise be split between cutting the deficit and boosting health, education and green energy infrastructure?

Let me get something on the record before I am inevitably misunderstood. Not every euro of this should be castigated: the French model of heavy state intervention in the economy is far from being misplaced. It’s one reason why, for all its problems, France maintains what may be Europe’s only “full spectrum” economy, from agriculture to AI. And if anything, it is proving to be more and more relevant as the order of the day; this has always been the way that China functioned, and it’s increasingly the way that the US is functioning.

Capitalism needs direction. As just one example, in undirected capitalism, we end up with a confounding situation where different geographies race to the bottom to draw investment in datacentres that are inevitably powered by new gas turbines and drain local water resources, rather than seeing regulation and incentives direct all of them to Iceland, where they could be powered by its more-than-sufficient geothermal energy (and the gains distributed).

In the deeply imperfect past, some of this “direction” was provided by internationally agreed rules and treaties, which allowed small states to be nimble and dynamic. This has given way to a new world where nations – or a club of nations – of sufficient size can be protectionist externally and thus allow for nimble dynamism and innovation within their own internal rules. France’s problem is thus one of scale. It, like every other European nation, is too small to provide such protective external walls – a task that must fall to the EU. At least, should European leaders finally accept that the old world they cling to is not coming back.

The EU cannot succeed in its current form in a world of power rather than rules, and where the US and China view geopolitics and economics holistically and don’t hesitate to throw their weight in one area behind their interests in another. The EU can, on the other hand, succeed if it adapts a classically French approach. It’s not just that France needs a wealth tax, it’s that the EU needs one; it’s not just that the French space agency needs more funding, it’s that the European Space Agency does; it’s not just that France should invest more in green energy, it’s that the EU as a whole needs energy independence through renewables.

The irony is that Europe won’t be pushed in this direction unless France has the heft to nudge it there. And to do that, France needs an economy that is performing and a political class capable of having an honest and long-term conversation, rather than scapegoating, gimmicks, or same old, same old.