U.S. Imposes 50% Tariff on Indian Imports, Escalating Trade Tensions

Washington/New Delhi: The United States’ 50% tariff on Indian imports came into effect at 12:01 am EDT (9:31 am IST) today, marking a sharp escalation in trade friction between Washington and New Delhi.

The punitive measure follows repeated warnings from U.S. President Donald Trump, who linked the hike to India’s continued imports of Russian crude oil. The new levy combines an earlier 25% duty with an additional 25% order signed by Trump earlier this month.

India, in response, denounced the move as “unfair, unjustified and unreasonable,” maintaining that its energy policy is guided solely by securing the best deals for its economy.

Key Developments at a Glance

Executive Order Signed: Trump formalized the additional 25% tariff on August 6, which, when combined with the existing duty, raised the total tariff rate to 50%.

Failed Negotiations: Reports confirm that five rounds of talks between Indian and U.S. negotiators, held from March through July, failed to resolve differences, leading to Trump’s decision.

Export Concerns: Indian exporters anticipate a steep decline in U.S. orders. Officials have indicated potential financial assistance and encouraged diversification into alternative markets, including China, Latin America, and the Middle East.

PM Modi’s Response: Addressing a gathering in Ahmedabad, Prime Minister Narendra Modi said India would “withstand external pressure,” pledging to protect farmers, small industries, and cattle-rearers from adverse impacts.

Diplomatic Channels Active: Despite the tariff dispute, both governments issued identical statements on Tuesday, affirming that senior officials had convened virtually to “strengthen the breadth and depth of the bilateral partnership.”

Exemptions Announced: Certain categories remain exempt, including shipments already in transit, humanitarian aid, and goods covered under reciprocal trade agreements. Critical sectors such as steel, aluminium, copper, auto components, passenger vehicles, and pharmaceuticals have also been spared.

Electronics Excluded: Notably, India’s electronics exports — including semiconductors, mobile phones, and tablets — remain outside the scope of the new tariffs.

Russian Oil Purchases Unchanged: India has not announced any restrictions on its Russian oil imports. Its envoy in Moscow reiterated that New Delhi will continue sourcing crude “from wherever it secures the best deal.”

Potential Trade Losses: Industry groups estimate that nearly 55% of India’s merchandise exports to the U.S. — valued at approximately $87 billion — could be hit, with competitors such as China, Bangladesh, and Vietnam standing to gain.

Broader U.S. Trade Posture: On Monday, Trump warned other nations imposing digital taxes or restrictive trade rules that they are “on notice” for “substantial additional tariffs.”