US President Donald Trump formally imposed a 25% tariff on Indian exports late on Thursday in a sweeping government order that hit dozens of buying and selling companions with new levies, escalating his international commerce conflict because the Friday deadline approached.
The Republican pressed forward with a commerce coverage that originally sparked market sell-offs when introduced in April. On Friday, international shares stumbled, with Europe’s STOXX 600 down 1.8% and Wall Avenue opening sharply decrease. Indian fairness benchmark indices Sensex and Nifty fell 0.72% and 0.82% respectively.
Items from India face the 25% levy plus an unspecified penalty for Russian oil purchases after talks slowed down over entry to India’s agriculture and different delicate sectors, with New Delhi refusing to open its labour-intensive farms to unfettered American imports.
Trump’s government order additionally set punitive charges for 69 buying and selling companions, together with 35% duties on Canada, 50% for Brazil, 20% for Taiwan and 39% for Switzerland, as a beforehand introduced 12.01am EDT August 1 deadline approached.
Items from unlisted nations face a ten% baseline tax. The brand new levies come into impact on August 7.
India now faces larger tariff charges than regional opponents, with Thailand, Indonesia and Malaysia set for 19% duties whereas Bangladesh, Vietnam and Taiwan face 20% charges—probably weakening India’s place as a most popular sourcing vacation spot for US firms.
India exports $86.5 billion value of products to the US, with a surplus of $41 billion. Nevertheless, trade consultants estimate {that a} vital chunk of Indian items could keep away from the upper duties for now for the reason that Trump administration has exempted electronics, prescribed drugs, vitality merchandise and important minerals from extra tariffs citing nationwide curiosity.
Nonetheless, analysts count on a big affect for India’s exports. Rankings company ICRA has lowered its development forecast for India’s GDP from 6.2% to six.0%, with additional reductions attainable if extra penalties are imposed. The World Commerce Analysis Institute estimates India’s items exports might decline by 30% to $60.6 billion in FY26.
“The tariff introduced for India is larger than different Asian nations comparable to Vietnam (20%), Indonesia (19%), and Japan (15%), which might probably weaken India’s place as a most popular sourcing vacation spot, notably in sectors like textiles, reduce and polished diamonds, tyres, metals, and auto parts,” ICRA mentioned in a report.
Questions loom over India’s purchases of discounted Russian vitality, which have prompted threats of extra penalties as Washington seeks to limit Moscow’s export revenues to push President Putin into Ukraine peace talks.
“A number of choices exist for India to diversify its crude purchases as Russian crude accounted for lower than 2% of Indian crude imports previous to FY2023. Nevertheless, the potential affect of chopping off Russian oil from the worldwide market can be a big enhance in worldwide oil costs as Russian oil exports account for 7% of world liquids consumption,” mentioned Prashant Vashisht, senior vp at ICRA.
“A major spike in crude costs might result in larger crude import invoice and beneath recoveries on sale of liquified petroleum fuel, petrol and diesel for the oil advertising firms. A $10/barrel enhance in crude oil costs would enhance the oil import invoice by about $13-14 billion,” Vashisht added.
He warned that disrupting Russian vitality exports might additionally make home fuel and LNG imports costlier for India.
India’s tariff charge might be lowered if New Delhi and Washington finalise a commerce deal, which each nations have been negotiating since February. Nevertheless, disagreements over market entry—notably in agriculture—in addition to tariff reciprocity and ongoing WTO disputes have held up progress.
“A commerce settlement may have a significant affect in accelerating our already-robust financial relationship. However an settlement can be extra vital to additional enhance our bigger strategic relationship. Not way back, any kind of commerce settlement was seen as nearly-impossible, but we are actually on the verge,” mentioned Rick Rossow, who holds the India chair on the Centre for Strategic and Worldwide Research, a Washington DC-based assume tank.
Basant Sanghera, managing principal on the Asia Group and former US diplomat, warned of missed alternatives. “It will be a missed alternative if the commerce deal doesn’t undergo. The interim commerce bundle on the desk is substantial, particularly by the requirements of the US-India financial relationship, and it gives a basis for future engagement.”
Sanghera argued there was a danger of issues worsening except the management on each side tackle a extra energetic position.
The tariff announcement additionally drew criticism from Capitol Hill, with Indian-American Congressman Ami Bera telling HT: “As negotiations between the USA and India proceed, it’s important that we pursue outcomes that replicate the power of our bilateral relationship and advance our shared strategic pursuits. India is a detailed good friend and strategic associate. President Trump’s misguided and erratic statements don’t replicate the bipartisan dedication to strengthening ties between our two nations.”
