US President Donald Trump announced on Wednesday that he will impose a 25 percent tariff on imports from India, along with additional penalties. This announcement came just two days before the August 1 deadline for reciprocal tariffs between the two countries. Trump focused much of his reasoning on India’s purchases of oil and military equipment from Russia, calling India “Russia’s largest buyer of energy, along with China.” He said India would have to pay penalties on top of the tariffs because of these purchases. Trump also pointed to India’s “far too high” tariffs on American goods as a reason for his decision.
A White House official and US economic advisor said that more details about the penalties would be shared later.
In response, the Indian government said it was carefully studying the situation and would take all necessary steps to protect the country’s national interests. The government released a statement saying, “The Government will take all steps necessary to secure our national interest, as has been the case with other trade agreements including the latest Comprehensive Economic and Trade Agreement with the UK.”
Experts warn that the new tariffs could affect major business plans. Navkendar Singh, Associate Vice-President for devices research at IDC India, said, “Today’s sudden announcement of 25 percent tariffs on exports from India to the US will certainly hit Apple’s plan of making India a large export hub for iPhone exports to the US.” Other electronics exports from India to the US are also expected to face challenges.
Jyoti Vij, Director General of FICCI, said the tariff move “will immediately impact India’s export-intensive sector,” but she expressed hope that ongoing talks between India and the US would lead to outcomes that benefit both countries.
If these tariffs come into effect, prices of many Indian exports to the US, such as drug formulations, telecom instruments, precious and semi-precious stones, petroleum products, auto parts, ready-made cotton garments, and iron and steel products, are likely to rise.
In its official response, the Indian government said that it will do whatever is necessary to protect its national interests, citing the recent India-UK Free Trade Agreement as an example of its commitment to fair trade.
