Donald Trump imposed 50% tariffs on most US imports from India, making good on a threat to punish one of the world\u2019s largest economies over its purchases of discounted Russian oil.<\/p>\n
The tariffs, which came into effect just after midnight on Wednesday in Washington, risk inflicting significant damage on the Indian economy and further disrupting global supply chains.<\/p>\n
US tariffs of 25% on Indian goods went into force earlier this month, but Trump announced plans to double the rate<\/a>, citing New Delhi\u2019s purchases of Russian oil, which the White House has argued is indirectly funding Russia\u2019s war against Ukraine.<\/p>\n The US president has significantly increased US tariffs on goods from much of the world since reentering the White House in January, straining relations with economies of allies and rivals and fueling fears of higher inflation.<\/p>\n This latest move leaves Indian exporters facing among the highest US duties Trump has slapped on goods from overseas. Brazil is also grappling with 50% tariffs on its exports to the US.<\/p>\n Ministers in India argue it has been unjustly singled out for its trade relationship with Russia and officials caution the country will likely work more closely with Moscow and Beijing \u2013 and drift further from Washington \u2013 as a result.<\/p>\n Most Indian goods exports to the US (worth $87.3bn to the US last year, according to the US trade representative) now face steep duties, although some key products including smartphones are set to be spared, for now.<\/p>\n The action, confirmed in a notice by the US Homeland Security Department earlier this week, prompted some economists to predict a precipitous fall in trade between the two countries.<\/p>\n \u201cI don\u2019t care what India does with Russia,\u201d Trump claimed on Truth Social, his social network, last month. \u201cThey can take their dead economies down together, for all I care.\u201d<\/p>\n In India, the mood has been defiant<\/a>. The country\u2019s government has refused to halt purchases of Russian oil, and prime minister Narendra Modi urged Indians to buy local.<\/p>\n \u201cAll of us should follow the mantra of buying only \u2018Made in India\u2019 goods,\u201d Modi said on Tuesday, encouraging shopkeepers to display big signs promoting domestic products. \u201cPressure on us may increase [from the tariffs], but we will bear it,\u201d he added.<\/p>\n Goldman Sachs\u2019 chief India economist, Santanu Sengupta, warned that sustained 50% levies could push gross domestic product (GDP) growth below 6%, from a forecast level of around 6.5%. Rival exporters from Turkey to Thailand, facing lower US tariffs, are already scooping up American buyers with offers of cheaper goods.<\/p>\n About 30% of India\u2019s exports to the US \u2013 including pharmaceuticals, electronics, raw drug materials and refined fuels \u2013 worth $27.6bn, remain duty-free. But sectors like textiles, gems and jewellery, and seafood, long reliant on the American market, face shrinking order books. \u201cAt a 50% tariff, it is very difficult to export,\u201d Sengupta said.<\/p>\n The effects are already visible. The Federation of Indian Export Organisations (FIEO) reported textile and apparel manufacturers in Tirupur, Delhi, and Surat had already halted production due to \u201cworsening cost competitiveness\u201d.<\/p>\n \u201cIndian goods have been rendered uncompetitive compared to competitors from China, Vietnam, Cambodia, the Philippines, and other south-east and south Asian countries,\u201d said FIEO president SC Ralhan.<\/p>\n Indian shares tumbled ahead of the tariffs, with the benchmark BSE Sensex dropping 1%, or 849 points, to 80,876 in Mumbai on Tuesday.<\/p>\n The US, India\u2019s largest export market, accounts for nearly a third of shipments in key sectors such as gems, jewellery and textiles, highlighting the potential economic impact.<\/p>\n Even if the tariff row eases, trust in future relations with Washington<\/a> is probably the biggest casualty.<\/p>\n \u201cTrump has blown it. The hard work between the two countries, which inherently did not trust each other but still managed to build a solid strategic relationship, is now at risk,\u201d said a senior Indian trade official, who requested anonymity. \u201cIt is going to take a long time to reboot, and it probably won\u2019t happen until Trump is out.\u201d<\/p>\n \u201cAt a working level, the countries must cooperate, but politically, neither can afford to appear weak,\u201d the official added.<\/p>\n S Jaishankar, the external affairs minister, called Washington\u2019s demand that New Delhi stop buying Russian crude \u201cunjustified and unreasonable\u201d and accused the west of hypocrisy, noting that Europe trades far more with Russia. To avoid the extra US tariff, India would have to replace about 42% of its oil imports.<\/p>\n While Trump has accused India of indirectly funding Russia\u2019s war against Ukraine through its purchases of Kremlin crude, he has not taken similar action against China, another major purchaser.<\/p>\n He has also sought to diffuse tensions with Moscow, inviting the Russian president Vladimir Putin to Alaska<\/a> for a summit earlier this month and even mooting a trilateral meeting<\/a> with the Ukrainian president Volodymyr Zelenskyy as part of efforts to end Russia\u2019s invasion of Ukraine.<\/p>\n Despite tensions, Jaishankar said US-India trade talks continue. \u201cWe are two big countries, we need to have conversations \u2026 the lines are not cut,\u201d he said.<\/p>\n Earlier hopes for a trade deal capping tariffs at 15% were dashed after India refused to open its agriculture market to US farm goods for fear of harming the country\u2019s poor farmers.<\/p>\n India has pivoted toward Russia, which it calls an \u201call-weather friend\u201d, and Jaishankar travelled to Moscow recently to meet Putin, who is expected to visit New Delhi later this year. Modi will also make his first trip to China in seven years to attend the Shanghai Cooperation Organisation summit, aiming to stabilise relations after a deadly 2020 Himalayan clash put ties into a deep freeze.<\/p>\n \u201cIndia will tiptoe toward China, but not in a full embrace. There is a trust factor from the past with China, and much history to reconcile, but the reality is that India must do business with China,\u201d said another senior Indian official, who also asked not to be named.<\/p>\n \u201cThe current [Trump] administration may set a record for the highest number of own goals with a top bilateral partner over such a short period of time,\u201d said veteran South Asia analyst Michael Kugelman.<\/p>\n","protected":false},"excerpt":{"rendered":"Donald Trump imposed 50% tariffs on most US imports from India, making good on a threat to punish…\n","protected":false},"author":2,"featured_media":376695,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,1700,16,15],"class_list":{"0":"post-376694","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115098806153903410","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/376694","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=376694"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/376694\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/376695"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=376694"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=376694"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=376694"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}