President Donald Trump issued an executive order imposing an additional 25% tariff on Indian goods, elevating the total import tax to 50%, among the highest for any U.S. trading partner.
Effective 21 days from August 7, the measure targets India’s $52 billion in Russian oil imports, which Trump claims indirectly fuels Russia’s military actions in Ukraine, posing a “national emergency.”
India’s Ministry of External Affairs deemed the tariffs “unfair, unjustified and unreasonable,” stressing that oil purchases are driven by market dynamics and the energy demands of 1.4 billion citizens.
The tariff hike jeopardizes India’s $87 billion export market to the U.S., affecting critical sectors like textiles, footwear, and gems.
Indian exporters now face a 30–35% competitive disadvantage against counterparts in Vietnam, Bangladesh, and Japan.
S.C. Ralhan, president of the Federation of Indian Export Organisations, stated, “This is a severe setback. Nearly 55% of our shipments to the U.S. will be affected.”
Economists warn that India’s GDP growth could fall below 6% this year, down from the central bank’s 6.5% projection, with the rupee and stock futures already reflecting market unease.
Indian officials are considering relief measures, including interest subsidies and loan guarantees, to support affected exporters.
The tariffs follow five failed rounds of trade negotiations, with U.S. demands for access to India’s agriculture and dairy markets clashing with India’s stance on Russian oil imports.
Analysts view this as the lowest point in U.S.-India relations since Trump’s return to office in January, contrasting the warmer ties seen during Prime Minister Narendra Modi’s February visit.
According to Reuters, a senior Indian official, speaking anonymously, said, “We still have a window,” hinting that the 21-day implementation period offers a chance for dialogue.
With Modi’s upcoming China visit signaling potential shifts in alliances, India must navigate its energy needs and U.S. pressures while protecting its export-driven economy.