US Imposes 50% Tariffs on Indian Goods, Sparking Economic and Diplomatic Fallout
The US has imposed a 50% tariff on Indian goods, escalating a trade dispute linked to India's continued purchase of Russian oil. The move impacts over half of Indian exports to its largest market, hitting sectors like textiles and jewellery. In response, India has extended duty-free cotton imports until December 31 to aid its textile industry, which faces losses estimated at ₹3,000 crore in Tamil Nadu alone. While government sources state diplomatic channels are open, officials are also strategizing export diversification to 40 new markets.
Unpacked:
India’s continued purchase of Russian oil is seen by the US as undermining Western sanctions against Russia following its invasion of Ukraine. The US views these purchases as supporting Russia economically, which has led to increased trade tensions and punitive measures like tariffs.
The US is India’s largest export market, particularly for textiles and jewellery. These sectors are highly dependent on American buyers, so a 50% tariff impacts a substantial portion of India’s export revenue and threatens jobs and industry stability in regions like Tamil Nadu.
US-India trade disputes date back decades, involving issues like tariffs, intellectual property rights, and market access. Tensions have periodically escalated since the 1970s, with events like withdrawal of trade preferences and disagreements over agricultural and digital trade.
Diversifying exports could help India reduce dependency on the US, spread risk, and tap into new growth opportunities. However, building market share in new destinations takes time and may not immediately offset losses from higher US tariffs.