Washington’s move to double tariffs on many Indian goods poses a huge risk to India’s biggest export market.
The United States has doubled tariffs on many imports from India to 50 percent, as US President Donald Trump followed through on his threat to punish New Delhi for buying discounted Russian oil.
The steep tariffs, which came into force on Wednesday, risk inflicting significant damage on the Indian economy by threatening trade with its largest export market. India exported more than $87m worth of goods to the US in 2024.
The Indian government, which has criticised the move as “unfair, unjustified and unreasonable”, estimates the tariffs will impact more than $48bn worth of exports. Indian officials warn that the new duties could make exports to the US commercially unviable, leading to job losses and slowing growth in the world’s fifth-largest economy, The Associated Press news agency reported.
The US had already slapped 25 percent tariffs on Indian goods earlier this month, as part of a wave of additional duties on goods from allies and competitors alike since Trump returned to the White House.
But the latest hike on Indian products doubles that rate, in a move to punish New Delhi for buying Russian oil, which the White House argues is indirectly funding Russia’s war on Ukraine.
More than one-third of India’s crude oil imports came from Russia last year, a trade relationship that has spurred criticism from Washington. Trump’s trade adviser, Peter Navarro, told reporters last week that “India doesn’t appear to want to recognise its role in the bloodshed” in Ukraine.
The move leaves Indian exporters facing among the highest US duties Trump has slapped on goods from overseas. Brazil is also grappling with 50 percent tariffs on many of its exports to the US.
‘Strategic shock’
A New Delhi-based think tank, Global Trade Research Initiative (GTRI), says labour-intensive sectors such as textiles, gems and jewellery, leather, and food are likely to be hit the hardest by the new tariffs, which pose a serious threat to India’s trade with the US.
“The new tariff regime is a strategic shock that threatens to wipe out India’s long-established presence in the US, causing unemployment in export-driven hubs and weakening its role in the industrial value chain,” Ajay Srivastava, GTRI founder and former Indian trade official, told the AP.
The US has, for now, exempted some key sectors, such as pharmaceuticals and electronic goods, from additional tariffs. The Trump administration has launched investigations into these and other sectors that could yet result in further duties.
The tariffs come as the Trump administration pushes for greater access to India’s agriculture and dairy sectors, amid Indian resistance to opening the sectors to cheaper US imports.
Prime Minister Narendra Modi has said India should not yield to the pressure.
“For me, the interests of farmers, small businesses and dairy are topmost. My government will ensure they aren’t impacted,” Modi said at a rally this week in his home state of Gujarat.