US Imposes 50% Total Tariff on Indian Goods Amid Dispute Over Russian Oil
The United States has imposed an additional 25% tariff on many Indian products, bringing the total levy to 50%. The new duty, which took effect August 27, is a punitive measure by the Trump administration in response to India's continued purchases of Russian crude oil. The move escalates trade tensions and is expected to impact $48.2 billion worth of Indian exports, including garments, gems, and chemicals, potentially leading to job losses and slower economic growth in affected sectors.
Unpacked:
India continued buying Russian crude oil due to its lower cost and the need to secure energy supplies for its growing economy. Indian officials argued that energy security and affordability are paramount, especially as Western alternatives remained more expensive, and India was not legally bound by all US or EU sanctions.
The tariffs have strained US-India relations, reversing recent progress in defense and trade cooperation. While both countries see each other as strategic partners, escalating trade tensions risk undermining collaboration on security, supply chains, and regional stability, especially as India perceives the tariffs as punitive and politically motivated.
India may retaliate by imposing tariffs on US goods or seek alternative markets for affected exports. Historically, India has responded to similar US trade actions with counter-tariffs and official protests. Diplomatically, India could also pursue negotiations or raise the issue at the World Trade Organization.
Garments, gems, and chemicals are especially vulnerable because they make up a significant share of India's exports to the US and are labor-intensive industries. High tariffs could lead to reduced demand, factory closures, and job losses, impacting millions of workers and slowing sectoral growth.