Trump imposes extra 25% tariff on Indian goods, ties hit new low
The new import tax, effective 21 days after August 7, will raise duties on some Indian exports to as high as 50% - among the highest levied on any U.S. trading partner.
Trump's executive order imposing the extra tariff did not mention China, which also imports Russian oil. A White House official had no immediate comment on whether an additional order covering those purchases would be forthcoming.
Analysts said Trump's move marks the most serious downturn in U.S.-India relations since his return to office in January. The tariffs threaten to disrupt India's access to its largest export market, where shipments totalled nearly $87 billion in 2024, hitting sectors like textiles, footwear, gems and jewelry.
It also marks a shift from the warm ties seen during Trump and Modi's February meeting, they said, pointing out Trump's recent remarks calling India's economy "dead", its trade barriers "obnoxious" and accusing the country of profiting from cheap Russian oil while ignoring the killings of Ukrainians in Russia's three-and-a-half-year-old invasion of its neighbour.
India's external affairs ministry called the decision 'extremely unfortunate,' noting that many other countries are also importing Russian oil in their national economic interest.
"India will take all necessary steps to protect its national interests," it said, adding that purchases were driven by market factors and the energy needs of India's 1.4 billion people.
The development comes as Indian Prime Minister Narendra Modi prepares for his first visit to China in over seven years, suggesting a potential realignment in alliances as relations with Washington fray.
Oil prices edged up about 1% on Wednesday after falling to a five-week low in the prior session after Trump penalised India for buying Russian oil and in light of a larger-than-expected U.S. crude storage draw last week.
Last week, U.S. Treasury Secretary Scott Bessent warned China that continued Russian oil purchases could trigger new tariffs, as Washington prepares for the expiry of a U.S.-China tariff ceasefire on August 12.
Trade between the United States and India - the world's biggest and fifth-largest economies respectively - is worth over $190 billion.
Exporters and trade analysts warn that the tariffs - which Trump casts as a driver to reduce U.S. trade deficits and reinvigorate domestic manufacturing - could severely disrupt Indian exports.
"This is a severe setback. Nearly 55% of our shipments to the U.S. will be affected,' said S.C. Ralhan, president of the Federation of Indian Export Organisations.
The increased duties place Indian exporters at a 30–35% disadvantage versus trade rivals in Vietnam, Bangladesh and Japan.
'With such obnoxious tariff rates, trade between the two nations would be practically dead,' said Madhavi Arora, economist at Emkay Global.
Indian officials acknowledged pressure to return to negotiations with the Trump administration. A phased cut in Russian oil imports and diversification could be a part of the compromise.
"We still have a window," said a senior Indian official, requesting anonymity. 'The fact that the new tariffs take effect in 21 days signals the White House is open to talks.'
Another official said there were no immediate plans for Modi or senior leaders to travel to Washington, nor were any retaliatory measures being considered.
Instead, the government is weighing relief for exporters, including interest subsidies and loan guarantees.
A sharp drop in U.S.-bound shipments could drag India's GDP growth below 6% this year, down from the central bank's 6.5% forecast, said Sakshi Gupta of HDFC Bank.
India's rupee weakened in offshore non-deliverable forwards market while stock futures fell marginally after the announcement.
"While markets have already started pricing in the risk of a sharp tariff hike, a near-term knee-jerk reaction is inevitable unless there's swift clarity or a breakthrough in negotiations," said Mayuresh Joshi, head of equity research for India at Willian O' Neil.
Trump's move follows five rounds of inconclusive trade talks, which stalled over U.S. demands for wider access to Indian agriculture and dairy markets. India's refusal to cut Russian oil imports - which hit a record $52 billion last year - ultimately triggered the tariff escalation.
U.S. and Indian officials told Reuters a mix of political misjudgement, missed signals and bitterness scuttled trade deal negotiations between the world's biggest and fifth-largest economies, whose bilateral trade is worth over $190 billion.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
13 minutes ago
- The Independent
Takeaways from AP's report on Alaska Natives' response to oil and mining proposals
President Donald Trump 's administration and its allies have pushed aggressively for drilling, mining and logging in Alaska. This has intensified long-standing debate over extraction projects in the nation's largest state, particularly within Alaska Native communities. Some view such projects as key to jobs and economic development. Others see them posing environmental risks as they've already faced severe fishing restrictions on the state's longest rivers due to a collapse in the salmon population. Scientists are unsure of the causes of the salmon collapse — which possibly include warming waters and commercial fishing — but opponents of extraction say its possible impacts could be similar in terms of endangering subsistence traditions and food sources. They say this risks, in turn, damaging their sacred connections to the land and to cultural traditions tied to fishing and hunting. How has the administration pushed for extraction projects? Trump signed an executive order on his first day in office in January seeking to 'maximize the development and production of the natural resources' in the state. Congress, in its recent budget bill, authorized an unprecedented four new sales of oil and gas leases in the coastal plain of the Arctic National Wildlife Refuge in northeast Alaska. It also authorized more sales in the National Petroleum Reserve-Alaska in the northern part of the state. Extraction proposals take years to become reality, if ever. Previous lease sales have generated limited interest, and the extent of oil reserves in the Arctic refuge remains uncertain. Members of Trump's Cabinet visited Alaska in June. They called for doubling the amount of oil coursing through its vast pipeline system and building a massive natural gas pipeline as its 'big, beautiful twin.' The administration is also boosting the proposed Ambler Mining District Industrial Access Project, which would include construction of a 200-mile road in wilderness areas and open the way for more mines. Private corporations are pursuing projects, some in collaboration with Alaska Native corporations — which sometimes are in conflict with their Indigenous shareholders — and landowners. One is an oil exploration project in the Yukon Flats. Another is a proposed major gold mine in southwestern Alaska, which would require a massive dam to contain millions of tons of chemical and mineral waste. Project proponents say the dam will be safely built, incorporating the surrounding geology and state-of-the-art design. Trump's policy shifts came even as he removed one of the most prominent Alaska Native names from the official map. He returned the federal name of 'Mount McKinley' to the largest mountain in Alaska and North America. For all their disputes over extraction, Native and Alaska political leaders were largely united in wanting to keep its traditional Athabascan name of Denali, which translates to 'the high one.' What are the views of Alaska Natives favoring such projects? They say the projects can be done safely and bring much-needed jobs and economic development. They say this enables Native communities to fund services while retaining their subsistence hunting, fishing and other cultural traditions. 'We find that balance,' said PJ Simon, first chief of the Allakaket Tribal Council. 'We don't want handouts by the federal government. We want to stand on our own two feet.' Regional and local Native-run corporations, with the mandate of pursuing economic development for the benefit of Native shareholders, are actively involved in extraction proposals. In some cases, they own land and mineral rights in areas eyed for drilling or mining. What about Alaska Natives opposing such projects? They fear large-scale drilling and mining will overwhelm their ancient subsistence traditions. They say any short-term profits will precede a long-term legacy of environmental impacts to rivers, tundra and hunting grounds. 'Our people have been stewards of this land for millennia, and we've taken that relationship seriously because we have to sustain our resources,' said Gloria Simeon of Bethel, a small regional hub in southwestern Alaska, and a member of the environmental advocacy group Mother Kuskokwim Tribal Coalition. Already, tribes are struggling with severe fishing restrictions on their longest rivers, the Yukon and Kuskokwim, because of a collapse in salmon populations, which they have relied on for generations. The salmon collapse has been blamed on such factors as commercial overfishing and climate change. But many fear that extractive industries will create similar and permanent damage to caribou, salmon and other traditional food sources. 'We're already dealing with salmon problems,' said Chief Brian Ridley of the Tanana Chiefs Conference, a Fairbanks-based coalition of Athabascan tribes across Interior Alaska that oppose proposed drilling projects and the Ambler road project. 'The concern is if we start going down this path anywhere along the Yukon or any of the rivers and there's a spill, would that completely eliminate all the salmon stocks?' He said it's not just theoretical. A mine disaster in Canada last year caused a massive release of cyanide-laced debris, which caused fears that contamination might spread. Such a mining accident in the Yukon watershed could 'really take all the gains that we've gotten of trying to get the fish stocks back and really put us back to zero,' Ridley said. Why are subsistence hunting and fishing so important? Alaska Native people have relied for generations on hunting and fishing to survive the brutal winters — and in modern times, as a healthier alternative to expensive groceries. Fish camps and caribou hunts are closely interwoven with cultural traditions, where elders transmit skills and stories to younger generations. 'Protecting the river and the land and the Earth is part of the partnership and the relationship that we have as caregivers,' said Simeon. Who are Alaska Natives? Alaska Natives consist of diverse cultural and language groups in the state, among them the Aleut, Athabascan, Iñupiat, Tlingit and Yup'ik. They widely share a history in the region dating back thousands of years. They also share cultural and spiritual traditions, including those closely associated with subsistence hunting, and a belief in a sacred connection to the land, water and wildlife. Specific practices vary, and many follow both traditional and Christian practices. More than 1 in 5 Alaskans identify as Alaska Native or American Indian alone or in combination with another racial group, the highest ratio of any state, according to 2020 U.S. Census figures. The 1971 Alaska Claims Settlement Act, which resolved long-standing land claims with the federal government, resulted in establishment of regional and local for-profit corporations run by Native leaders for the benefit of Native shareholders. In some cases, such corporations are involved in extraction projects that tribal coalitions from the same area oppose. ___ Associated Press religion coverage receives support through the AP's collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content.
The Independent
13 minutes ago
- The Independent
South Park targets Donald Trump once again
The latest South Park episode continues its satire of Donald Trump, his colleagues, and supporters. Titled Got a Nut, the episode features parodies of figures, including a miniature JD Vance, Kristi Noem, and Cartman imitating Charlie Kirk. The plot sees Mr Mackey join ICE due to financial struggles, leading to a scene where an animated Kristi Noem parodies her controversial dog-killing confession during an ICE orientation. The episode depicts Trump inviting Mackey to his Mar-a-Lago complex, where he is shown in bed with Satan, with the mini JD Vance offering assistance. This instalment follows a social media exchange where the Department of Homeland Security used a South Park image to promote ICE, prompting a sarcastic retort from the show's official account.
The Independent
13 minutes ago
- The Independent
Cost of electronics expected to rise as Trump announces 100% tariff on computer chips
Donald Trump has said he will impose a 100% tariff on computer chips, likely resulting in the costs of electronic goods and household appliances rising. Speaking in the Oval Office on Wednesday (6 August) during a meeting with Apple CEO Tim Cook, the US president said that companies which make chips in the US would be spared the import tax. 'So, 100% tariff on all chips and semiconductors coming into the United States. But if you've made a commitment to build or if you're in the process of building, as many are, there is no tariff," Trump said. The levy on all foreign computer chips is set to be officially announced next week and is expected to apply to all countries and companies.
