US President Donald Trump unveiled sweeping new tariffs on dozens of countries including a steep 25 per cent for India, marking a new era of American protectionism and triggering fears of fresh turbulence in trade across the globe.
The US president signed an executive order raising tariffs for over five dozen countries with Washington's negotiations for trade deals going down the wire ahead of the August 1 deadline.
The new tariffs for Indian goods came in the midst of ongoing negotiations between the two countries for a bilateral trade deal as well as Trump's strong criticism of India for its trade ties with Russia, especially in the energy sector. He even described the Indian economy as "dead", a remark which prompted New Delhi to say that India is the world's fastest-growing major economy.
Without getting into Trump's comments or the tariffs and his diatribe against India, the Ministry of External Affairs (MEA) on Friday gave a measured response.
The US and India "partnership has weathered several transitions and challenges. We remain focused on the substantive agenda that our two countries have committed to and are confident that the relationship will continue to move forward," said MEA spokesperson Randhir Jaiswal in New Delhi.
He said the two countries "share a comprehensive global strategic partnership anchored in shared interests, democratic values, and robust people-to-people ties." Asked about India's energy ties with Russia, Jaiswal said it is guided by national interest, adding: "In securing our energy needs, we are guided by what is on offer in the markets, and by the prevailing global circumstances".
The imposition of the 25 per cent US tariff will impact about half of India's over USD 86 billion worth of exports to America, government sources said in Delhi.
The sectors which could bear the brunt of 25 per cent duty include textiles/ clothing (10.3 billion), gems and jewellery (12 billion), shrimp (USD 2.24 billion), leather and footwear (USD 1.18 billion), animal products (USD 2 billion), chemicals (2.34 billion), and electrical and mechanical machinery (about USD 9 billion).
The sources said that about half of the goods exported from India to the US are in the exemption category (such as pharma and electronic goods), so, the impact will be only on the remaining half.
In the Executive Order titled 'Further Modifying The Reciprocal Tariff Rates’, Trump announced tariff rates for nearly 70 nations.
A 25 per cent "Reciprocal Tariff, Adjusted" has been imposed on India, according to the list released. The executive order however does not mention the “penalty” that Trump had said India will have to pay because of its purchases of Russian military equipment and energy.
Besides the new tariff, Trump had also announced an additional "penalty" for New Delhi's purchases from Russia.
While August 1 was the tariff deadline, the new levies will come into effect from August 7.
In April, Trump had announced that India will face a 26 per cent “discounted reciprocal tariff”, a per cent higher than the rate announced now.
Responding to the executive order, Senior Vice President of the Asia Society Policy Institute (ASPI) and former Deputy US Trade Representative Wendy Cutler said in a statement that India, a "promising candidate for an early agreement", was assigned a 25 per cent tariff.
This "calls into question the fate of a bilateral trade agreement. The President’s annoyance with India on a range of trade and broader matters rang through his Truth Social post,” Cutler said.
Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said that the order provides relaxation for goods in transit and those loaded on ship for final sailing to the US by August 7.
Goods cleared for consumption in the US by October 5 will also not be subject to reciprocal tariffs, thus providing some relief to exporters of goods already shipped or likely to be shipped this week.
According to Cutler, US customs officials will face challenges implementing the executive order, particularly with the different tariff rates now applied across the world.
In the executive order, Trump stated that some trading partners have agreed to, or are on the verge of agreeing to, meaningful trade and security commitments with the US, thus signalling their sincere intentions to permanently remedy trade barriers and align with Washington on economic and national security matters.
“Other trading partners, despite having engaged in negotiations, have offered terms that, in my judgment, do not sufficiently address imbalances in our trading relationship or have failed to align sufficiently with the United States on economic and national-security matters,” he said.
The tariffs in the list range from 10 per cent to 40 per cent, with Japan being charged 15 per cent, Laos and Myanmar (40 per cent each), Pakistan (19 per cent), Sri Lanka (20 per cent) and the United Kingdom (10 per cent).
Declaring that the US has a massive trade deficit with India, Trump had said that while “India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any country.
"Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of energy, along with China, at a time when everyone wants Russia to stop the killing in Ukraine — All things not good!” Trump said.
He said that India will therefore be paying a tariff of 25 per cent, plus a penalty for the above, starting on August 1.
Trump also mounted a sharp attack on India and Russia for their close ties.
"I don't care what India does with Russia. They can take their dead economies down together, for all I care," he said.
"We have done very little business with India, their Tariffs are too high, among the highest in the World," he added.
In its reaction, India said it will take all necessary steps to safeguard and promote national interest and that the implications of the tariffs are being examined.
This report includes content sourced from Press Trust of India (PTI), edited for clarity and context.
