Doubling of Trump’s Tariffs: Key Impacts on Indian Businesses and Investment Opportunities
NEW DELHI: The United States implemented an additional 25% tariff on Indian imports on Wednesday, increasing duties on certain goods to as high as 50%. This places Indian products among those subjected to some of the steepest tariffs imposed by Washington, comparable to those on Brazil and China.
The tariff hike follows a breakdown in trade negotiations between India and the U.S., which have conducted five rounds of discussions since April. Key disagreements centered around opening India’s extensive farm and dairy sectors to U.S. products and India’s ongoing purchases of Russian oil. Both sides also cited political miscalculations and missed diplomatic signals as factors in the collapse of talks.
The initial 25% tariff on Indian imports was announced in July and came into effect on August 7. This measure was part of the Trump administration’s reciprocal tariff policy targeting countries with significant barriers to U.S. goods. The U.S. recorded a $45.8 billion trade deficit with India in 2024. Just hours before the new levy took effect, Washington imposed an additional 25% tariff, specifically citing India’s continued importation of Russian oil. Notably, Russian oil now constitutes approximately 35% of India’s total fuel imports, a steep rise from 0.2% prior to the Ukraine conflict.
The sectors most affected by the additional tariffs—potentially pushing total duties to 50%—include garments, gemstones and jewelry, footwear, sporting goods, furniture, and chemicals. This move threatens thousands of small exporters and their associated jobs. However, goods already in transit to the U.S. before the tariff deadline have been granted a three-week exemption. Exemptions also apply to steel, aluminum, passenger vehicles, copper, and other items subject to separate tariffs under reciprocal trade programs.
In response, India has pledged financial support measures, such as increased subsidies on bank loans and initiatives to aid exporters in diversifying markets to mitigate potential losses due to the tariffs. The government has identified nearly 50 countries to target for increased exports. Officials emphasize that trade discussions with the U.S. are ongoing.
Regarding Russian oil imports, India has not issued any new directives curbing purchases. Meanwhile, Russian embassy officials in New Delhi expressed confidence that Moscow will continue supplying oil to India.
This latest tariff escalation marks a significant chapter in the complex trade relationship between the two nations.
Special Analysis by Omanet | Navigate Oman’s Market
The U.S.’s imposition of up to 50% tariffs on Indian imports, driven by trade negotiation failures and India’s continued Russian oil purchases, highlights rising geopolitical risks in global trade dynamics. For businesses in Oman, this underscores the importance of diversification and vigilance in supply chains, as sudden tariff shifts can disrupt regional trade flows. Smart investors should consider exploring alternative export markets and industries less exposed to U.S.-India tensions to mitigate risk and capitalize on new trade realignments.
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