Indian Exports to US Face High Tariffs Amid Russia Oil Dispute
Indian exports to the United States are set to face significant tariffs, potentially as high as 50%, in retaliation for the country’s continued purchases of Russian oil. The move, sparked by President Donald Trump’s ultimatum, has strained US-India ties and may have far-reaching consequences for the world’s fifth-largest economy.
The US was India’s top export destination in 2024, with shipments worth $87.3 billion. Analysts warn that the proposed tariffs would be devastating for smaller Indian firms, which would struggle to compete with rival exporters from countries like Bangladesh and Vietnam. Economists estimate that the tariffs could shave 70 to 100 basis points off India’s GDP growth this fiscal year, dragging growth below six percent.
Exporters in textiles, seafood, and jewelry are already reporting cancelled US orders and losses, raising fears of heavy job cuts. However, pharmaceuticals and electronics, including iPhones assembled in India, are exempt from the tariffs for now. S&P estimates that exports equivalent to 1.2% of India’s GDP will be hit, but notes that the impact will be a one-off shock that will not derail the country’s long-term growth prospects.
The dispute centers on India’s refusal to cease purchasing Russian oil, which the US argues helps finance Moscow’s war in Ukraine. Indian Foreign Minister Subrahmanyam Jaishankar has pushed back against US criticism, arguing that India’s purchases have helped stabilize global oil markets and were done with Washington’s tacit approval in 2022.
As the deadline for the tariffs approaches, India is seeking to bolster its economy and deepen ties with other countries, including China and BRICS partners. Prime Minister Narendra Modi is preparing to visit China, and the government is working on a $2.8 billion package for exporters to ease liquidity concerns. The situation remains uncertain, with trade talks between the US and India stalled over issues like agriculture and dairy. Despite this, Jaishankar says negotiations are ongoing, and a resolution may still be possible. The outcome of this dispute will have significant implications for India’s economy and its relationships with major trading partners.
