The new US duties on Indian goods announced by President Donald Trump earlier in August have come into effect.
The additional 25 per cent duties came into effect after midnight on Wednesday. The move doubles the total US tariff on Indian goods to 50 per cent and is part of Trump’s efforts to weaken Russia’s economic base.
Bloomberg writes that the duties will affect more than 55% of goods shipped to the US – India’s largest market – and will hurt labour-intensive industries such as textiles and jewellery the most. Key exports such as electronics and pharmaceuticals are exempt from duties, preventing Apple Inc’s massive investment in new factories in India for now.
The high duties threaten the competitiveness of India’s exports against rivals such as China and Vietnam, while raising questions about Prime Minister Narendra Modi’s ambitions to turn the South Asian country into a major manufacturing centre.
Exporters of garments, footwear and small manufactured goods such as toys are bracing for a drop in orders and possible job cuts.
India’s Ministry of Commerce and Industry did not respond to a request for comment Wednesday.
India was one of the first countries to enter trade talks with the Trump administration, but its own high tariffs and protectionist policies in sectors such as agriculture and dairy have frustrated U.S. negotiators.
Relations deteriorated further after Trump criticised India for its purchase of Russian oil.
US President Donald Trump issued an executive order on 6 August imposing an additional duty of 25 per cent on imports of goods from India, saying the country was directly or indirectly importing Russian oil.
“India not only buys huge quantities of Russian oil, but resells much of it on the open market at a large profit,” Trump wrote on Truth Social on 4 August. – They don’t care how many people in Ukraine are being killed by the Russian war machine.”
On the same day, India accused the US and the EU of double standards on trade with Russia. In a statement, the Indian Foreign Ministry said Washington and Brussels continue to trade with Russia even though it is “not a matter of vital necessity” for them.
India’s foreign ministry said on 6 August that Trump’s decision to impose additional duties on goods from India because of the country’s purchase of Russian oil was “extremely unfortunate”.
India and Russia have pledged to increase their annual turnover by 50 per cent to $100 billion over the next five years. India has increased its oil imports from Russia since it launched a full-scale invasion of Ukraine in 2022 and now accounts for about 37 per cent of Russian oil exports, according to Moscow-based Kasatkin Consulting.