WASHINGTON/NEW DELHI, Aug 1: US President Donald Trump has imposed new tariffs on dozens of countries, including a steep 25% for India, marking a new era of American protectionism and triggering fears of fresh turbulence in trade across the globe. The new tariffs come in the midst of ongoing negotiations between the two countries for a bilateral trade deal and Trump’s strong criticism of India for its trade ties with Russia, especially in the energy sector. He even described the Indian economy as “dead,” a remark that prompted New Delhi to say that India is the world’s fastest-growing major economy.
The Ministry of External Affairs (MEA) gave a measured response, saying the US and India “partnership has weathered several transitions and challenges. We remain focused on the substantive agenda that our two countries have committed to and are confident that the relationship will continue to move forward.” The imposition of the 25% US tariff will impact about half of India’s over USD 86 billion worth of exports to America, government sources said in Delhi.
The sectors which could bear the brunt of the 25% duty include textiles/clothing (10.3 billion), gems and jewelry (12 billion), shrimp (USD 2.24 billion), leather and footwear (USD 1.18 billion), animal products (USD 2 billion), chemicals (2.34 billion), and electrical and mechanical machinery (about USD 9 billion). About half of the goods exported from India to the US are in the exemption category (such as pharma and electronic goods), so the impact will be only on the remaining half.
In the Executive Order titled ‘Further Modifying The Reciprocal Tariff Rates’, Trump announced tariff rates for nearly 70 nations. A 25% “Reciprocal Tariff, Adjusted” has been imposed on India, according to the list released. The executive order does not mention the “penalty” that Trump had said India will have to pay because of its purchases of Russian military equipment and energy.
While August 1 was the tariff deadline, the new levies will come into effect from August 7. In April, Trump had announced that India will face a 26% “discounted reciprocal tariff”, a per cent higher than the rate announced now.
The tariffs in the list range from 10% to 40%, with Japan being charged 15%, Laos and Myanmar (40 per cent each), Pakistan (19 per cent), Sri Lanka (20 per cent) and the United Kingdom (10 per cent). Trump declared that the US has a massive trade deficit with India, saying that while “India is our friend, we have done relatively little business with them because their tariffs are far too high, among the highest in the world,” and they have the most strenuous and obnoxious non-monetary Trade Barriers of any country. (PTI)
