A 50% U.S. tariff came into force on numerous Indian goods on Wednesday, effectively doubling previous duties as President Donald Trump aimed to penalize New Delhi for purchasing Russian oil.
Donald Trump has increased scrutiny on India regarding energy deals, which serve as a major income stream for Russia’s military efforts in Ukraine, as part of an initiative aimed at concluding the war.
The most recent development puts pressure on U.S.-India relations, offering New Delhi new motivation to strengthen connections with Beijing.
Although Trump has imposed new tariffs on both allies and rivals since regaining the presidency in January, this 50-percent rate represents one of the highest levels that U.S. trade partners encounter.
However, importantly, exceptions still apply to industries that might face additional taxes — such as those involving medicines and microchips.
The administration under Trump has initiated inquiries into these and additional industries, which may lead to more tariffs. Smartphones are also included in the category of items that are exempt.
Sectors that have already been targeted, including steel, aluminum, and automotive industries, are also exempt from these nationwide taxes.
In 2024, the United States remained India’s largest market for exports, totaling $87.3 billion in goods sent abroad.
However, experts have warned that a 50% tax is similar to a trade blockade and could negatively impact smaller businesses.
Textile, seafood, and jewelry exporters had already begun experiencing canceled U.S. orders and lost business to competitors like Bangladesh and Vietnam, sparking concerns about significant employment reductions.
‘Eroded trust’
New Delhi has condemned Washington’s action as “unfair, unwarranted, and illogical.”
India, the world’s fifth-biggest economy, aims to ease the impact, as Prime Minister Narendra Modi pledged to reduce taxes for people during his yearly address commemorating the country’s freedom.
Earlier, Modi also promised self-sufficiency, vowing to protect his nation’s interests.
The Ministry of Foreign Affairs earlier stated that India has started purchasing oil from Russia, as conventional sources have been redirected to Europe due to Russia’s attack on Ukraine.
It mentioned that Washington strongly promoted these imports during that period to enhance stability within the worldwide energy marketplace.
In 2024, Russia contributed almost 36% of India’s overall crude oil imports. Purchasing oil from Russia helped India save billions in import expenses, which allowed local fuel prices to remain fairly steady.
However, the Trump administration remained resolute about its tariff initiatives as the deadline for Wednesday approached.
Former President Trump’s trade advisor, Peter Navarro, stated to journalists earlier this week that “India does not seem willing to acknowledge its part in the violence.”
“it’s becoming close to xi jinping,” navarro added, referencing the chinese president.
Wendy Cutler, who serves as a senior vice president at the Asia Society Policy Institute, stated to AFP: “A particularly concerning aspect of the Trump administration’s tariff situation is how India transitioned from being a strong prospect for an initial trade agreement into a country encountering some of the highest tariffs set by the United States toward any business associate.”
Former U.S. trade official Cutler stated that India has continued to implement reforms and open up its economy, even considering its past strict approach towards trade issues.
However, these tendencies could face scrutiny due to Trump’s stringent taxes.
“High tariffs have rapidly damaged the trust between the two nations, which may require many years to restore,” she stated.
Trump has employed tariffs as a means of tackling issues ranging from what Washington considers unjust trading methods to discrepancies in trade balances.
The US trade deficit served as a major reason for implementing increased tariffs on numerous countries starting in early August — affecting allies ranging from the European Union to Indonesia.
However, the 79-year-old Republican has additionally criticized certain nations like Brazil regarding the trial of its ex-president Jair Bolsonaro, who faces allegations of planning a coup.
This month, US tariffs on numerous Brazilian products increased to 50 percent, although they come with extensive exceptions.
