KEY POINTS
- Trump raises tariff on Indian goods to 50% over Russian oil imports.
- Tariff takes effect in three weeks, following earlier 25% country-specific duties.
- US-India trade deal talks collapse, despite five negotiation rounds.
- India faces penalties while US signs better deals with Japan, EU, and Pakistan.
WASHINGTON: US President Donald Trump on Wednesday signed an executive order imposing an additional 25 percent tariff on Indian goods, raising total duties to 50 percent, in response to New Delhi’s continued purchase of Russian oil.
The new tariffs, which come into effect in three weeks, are in addition to previously announced 25 percent country-specific duties set to be implemented on Thursday, Indian media reported.
The tariff is set to take effect in three weeks and would be added on top of a separate 25 percent country-specific tariffs that were set to be implemented on Thursday, according to the executive order cited by Indian media.
In the order, Trump cited the “unusual and extraordinary threat to the national security and foreign policy of the United States” posed by Russia’s actions regarding Ukraine.
“I find that the Government of India is currently directly or indirectly importing Russian Federation oil,” Trump stated in the order.
The order maintains exemptions for items targeted by separate sector-specific duties such as steel and aluminum, and categories that could be hit like pharmaceuticals, AFP reported.
Trump’s latest tax tirade takes total duties on import of Indian goods into the United States to 50 percent, 20 percent more than the tariff on China and 21 percent more than the tariff on Pakistan.
The 50 percent tariff hit comes hours after angry comments about India-US trade relations.
“India has not been a good trading partner… we settled on 25 percent… but I think I’m going to raise that substantially over the next 24 hours because they’re buying Russian oil,” he told a US broadcaster.
On July 30, Trump decreed India would pay a 25 percent tariff in addition to a “penalty” for continuing to buy oil and military equipment from Russia.
Downturn in US-India ties
Ties between the US and India have taken a downturn as they failed to reach a trade agreement to avert Trump’s tariffs.
After five rounds of trade negotiations, Indian officials were so confident of securing a favourable deal with the US that they even signalled to the media that tariffs could be capped at 15 percent.
Indian officials expected Trump to announce the deal himself weeks before the August 1 deadline. The announcement never came.
New Delhi is now left with the surprise imposition of a 50 percent tariff on Indian goods, along with unspecified penalties over oil imports from Russia, while Trump has closed larger deals with Japan and the EU, and offered better terms to Pakistan.
India believed that after visits by Indian Trade Minister Piyush Goyal to Washington and US Vice President J.D. Vance to Delhi, it had made a series of deal-clinching concessions, Reuters reported.
New Delhi was offering zero tariffs on industrial goods that formed about 40 percent of US exports to India, Reuters reported, citing two Indian government officials.
Over-confidence and miscalculation
Indian Prime Minister Narendra Modi, who visited Washington in February, agreed to target a deal by fall 2025, and more than double bilateral trade to $500 billion by 2030.
To bridge the $47 billion goods trade gap, India pledged to buy up to $25 billion in US energy and boost defence imports.
But officials now admit India grew overconfident after Trump talked up a “big” imminent deal, taking it as a signal that a favourable agreement was in hand, according to Reuters.
Later, India scaled back expectations after the US signed trade deals with key partners, including Japan, and the European Union, hoping it could secure a similar 15 percent tariff rate with fewer concessions.
