The United States has imposed a 50% tariff on various Indian products, effective Wednesday, in response to India’s purchase of Russian oil. This move doubles the existing duty and is part of President Donald Trump’s effort to pressure New Delhi into ending its energy transactions with Moscow, which are a key source of revenue for Russia’s war in Ukraine.
The new tariffs are among the highest imposed by the US on its trading partners, but exemptions remain for sectors such as pharmaceuticals, computer chips, and smartphones. Industries like steel, aluminum, and automobiles, which have already been subject to separate investigations, are also spared from these countrywide levies.
The US was India’s top export destination in 2024, with shipments worth $87.3 billion. However, analysts have warned that a 50% duty is equivalent to a trade embargo and could harm smaller firms. Exporters of textiles, seafood, and jewelry have already reported canceled US orders and losses to rivals like Bangladesh and Vietnam, raising concerns about potential job cuts.
India has criticized the US move as “unfair, unjustified, and unreasonable.” The country is looking to cushion the blow, with Prime Minister Narendra Modi promising to lower the tax burden on citizens. Modi has also vowed to defend India’s interests and promote self-reliance.
The US tariffs are part of a broader campaign by the Trump administration to address trade imbalances and perceived unfair trade practices. The administration has launched investigations into various sectors, including pharmaceuticals and computer chips, which could lead to further duties.
Russia accounted for nearly 36% of India’s total crude oil imports in 2024, with the country saving billions of dollars on import costs by buying Russian oil. However, the Trump administration has held firm on its tariff plans, with trade adviser Peter Navarro stating that India “doesn’t appear to want to recognize its role in the bloodshed” and is “cosying up to Xi Jinping,” the Chinese president.
The move has eroded trust between the US and India, according to Wendy Cutler, senior vice president at the Asia Society Policy Institute. Cutler noted that India has been reforming and opening up despite its history of being tough on trade matters, but the high tariffs could undermine this progress and take years to rebuild. The tariffs are expected to have significant implications for the US-India trade relationship and the global economy.
