US President Donald Trump has imposed an additional 25 percent tariff on India. This tariff has been imposed as a penalty for continuing to buy oil from Russia. After the additional tariff, the total tariff on Indian goods will be 50 percent, except for some exempted goods. Trump signed the executive order to impose additional tariffs less than 14 hours before his initial tariff came into effect. On July 30, Trump announced a 25 percent tariff on Indian goods, which will come into effect from August 7, i.e., today. At the same time, the additional tariff will come into effect 21 days later, i.e., from August 27. Trump has repeatedly said in the past that India buys oil from Russia, and by doing so, it is helping Russian President Vladimir Putin in instigating the Ukraine war. A day earlier, he had also talked about imposing very high tariffs on India within 24 hours.
Low duty will give India's competitors an edge in the US market
India is likely to be hit twice by America's tariff increase to 50 percent. Higher tariffs can have the worst impact on India's sectors like textiles, marine products, and leather exports. Apart from this, there is a risk of Indian products lagging in the US market due to lower tariffs on regional competitors like Myanmar, Cambodia, and Bangladesh.
How much tariff on which countries
After the additional tariff, India will become the country with the highest US tariff in the world, along with Brazil. The US has imposed a 40 percent tariff on Myanmar, 36-36 percent on Thailand and Cambodia, 35 percent on Bangladesh, 32 percent on Indonesia, 30-30 percent on China and Sri Lanka, 25 percent on Malaysia, and 20-20 percent on the Philippines and Vietnam. These countries have business with the US in many sectors, which is directly related to India. Now that there will be more tariffs on these countries and India, then naturally these competitors of India will get an edge in the US market. However, a hope of tariff reduction is seen in the event of a bilateral trade agreement between India and the US, for which a team of US negotiators is scheduled to visit India on August 25.
These sectors will be affected.
The sectors that will have to bear the brunt of the US's increased tariff include textiles/apparel ($10.3 billion), gems and jewellery ($12 billion), shrimp ($2.24 billion), leather and footwear ($1.18 billion), animal products, chemicals ($2.34 billion) and electrical and mechanical machinery ($9 billion). According to exporters, this move will seriously impact India's $86 billion worth of exports to the US.
These items are exempt from the high tariff.
However, the US has excluded some items from high tariffs. These include pharmaceuticals, energy products such as crude oil, refined fuel, natural gas, coal, and electricity, critical minerals, and electronics such as computers, tablets, smartphones, solid-state drives, flat panel displays, and integrated circuits.
55 percent of US exports will be affected
Federation of Indian Export Organizations (FIO) Director General Ajay Sahai has described the US move to increase tariffs as surprising. He said that this will affect 55 percent of India's exports to the US. In 2024-25, bilateral trade between India and the US was $131.8 billion. In this, India exported goods worth $86.5 billion and imported goods worth $45.3 billion.
Exports may decrease by up to 50 percent.
Think tank Global Trade Research Initiative (GTRI) said that tariffs are likely to make Indian goods expensive in the US. This is likely to reduce exports to the US by 40-50 percent. Kolkata-based seafood exporter and MD of Mega Moda, Yogesh Gupta, said that now India's shrimp will become expensive in the US market. He said, We are already facing tough competition from Ecuador as there is only a 15 percent tariff there. Indian shrimp already attracts a 2.49 per cent anti-dumping duty and a 5.77 per cent countervailing duty. After this 25 per cent, the duty will increase to 33.26 per cent from August 7.
Setback for the textile industry
Confederation of Indian Textile Industry (CITI) has called the announcement of additional tariffs a big setback for the Indian textile industry. This will make the industry more competitive in the US. The Confederation said that it is extremely concerned about the possible adverse impact of the 50 per cent US tariff rate. The US is India's largest market for textile and apparel exports. Kama Jewellery Managing Director Colin Shah said that this move is a serious setback for Indian exports. This will directly affect about 55 per cent of exports to the US.
Kept the option open for talks
As part of his move to put pressure on India, Trump has announced an additional 25 per cent tariff, but has also kept the option open for talks. According to the executive order, the additional tariff will be effective from August 27, while the US team is coming to India on August 25 to negotiate a bilateral trade agreement. Trump had kept the option of talks open even after the announcement of the initial tariff. Initially, the initial tariff was to be implemented on August 1, which was extended to August 7.
50 percent tariff is an unfair step: India
India has called the imposition of a 50 percent tariff by the US an unfair step. The Ministry of External Affairs said that India's energy imports are based on market factors. Its purpose is to ensure energy security for the country. A 50 percent tariff on Indian goods is unfair, unjust, and unreasonable. India will take all necessary steps to protect its national interests.
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