US President Donald Trump has imposed steep 50% tariffs on Indian goods to punish the country for purchasing Russian oil, undermining decades of US efforts to strengthen ties with New Delhi.

Source: Bloomberg

Details: The new tariffs, the highest in Asia, double the existing 25% tariff on Indian exports.

They cover more than 55% of goods shipped to the US – India’s largest market – impacting labour-intensive industries like textiles and jewellery.

Key exports such as electronics and pharmaceuticals are exempt, sparing Apple Inc. from major investments in a new Indian plant.

The excessively high tariffs jeopardise the competitiveness of Indian exports compared with rivals like China and Vietnam.

This move marks a sharp deterioration in US-India relations, reversing a long-standing strategy of engaging India as a counterbalance to China.

Trump has criticised India for buying Russian oil, which he says is financing Kremlin leader Vladimir Putin’s war against Ukraine. New Delhi has defended its ties with Russia and called the US actions unfair, unjustified and unreasonable.

“This is going to be a very big impact on Indian exporters because 50% tariffs are not workable for the clients,” said Israr Ahmed, Managing Director of Farida Shoes Pvt. Ltd., whose business is 60% dependent on the US market.

India was one of the first countries to begin trade negotiations with the Trump administration, but its high domestic tariffs and protectionist policies in sectors like agriculture and dairy disappointed US negotiators.

Background:

Refineries in India, among the largest buyers of Russian oil, are planning to reduce their purchases in the coming weeks.India has also paused plans to acquire new US weapons and aircraft, marking the first clear sign of Delhi’s discontent following President Donald Trump’s increased tariffs on Indian exports.

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