President Donald Trump enacted a heavy 50% tariff on Indian products to penalize the nation for purchasing Russian oil, disrupting a longstanding effort by Washington to strengthen relations with New Delhi.
The new tariffs, the highest in Asia, began at 12:01 a.m. in Washington on Wednesday, increasing the current 25% duty on Indian exports to double. The tariffs will affect over 55% of products exported to the US — India's largest market — and significantly impact labor-intensive sectors such as textiles and jewelry. Major exports such as electronics and pharmaceuticals are excluded, currently protecting Apple Inc.'s significant new factory investments in India.
The decision signifies a significant decline in relations between the two countries and a reversal in Washington's long-standing approach to engage India as a counterbalance to China. Trump criticized India for purchasing Russian oil, claiming it was supporting President Vladimir Putin's war in Ukraine. New Delhi has justified its relationship with Russia and labeled the US's actions as "unfair, unjustified, and unreasonable."
The soaring tariffs jeopardize India’s export competitiveness against competitors such as China and Vietnam, while casting doubt on Prime Minister Narendra Modi’s goals to convert the South Asian country into a significant manufacturing center.
Clothing, footwear, and small manufactured goods exporters, such as toy producers, are preparing for declining orders and potential job reductions.
“This will significantly affect Indian exporters because 50% tariffs are unfeasible for the clients,” stated Israr Ahmed, managing director of Farida Shoes Pvt. Ltd., which relies on the US for 60% of its operations. He states that buyers have requested exporters to provide specifications of products to suppliers in other countries, heightening the risk of orders being redirected to nations such as Bangladesh and Vietnam.
India's Ministry of Commerce and Industry did not reply to a comment request on Wednesday.
The tariffs have surprised Indian officials and come after months of trade negotiations between New Delhi and Washington. India was one of the initial nations to initiate trade discussions with the Trump administration, yet its elevated tariffs and protectionist measures in areas like agriculture and dairy have impeded US negotiators.
Tensions escalated when Trump criticized India for purchasing Russian oil. New Delhi has stated that the acquisitions help stabilize energy markets and indicated it will continue to buy Russian oil “based on the financial advantage.”
