WASHINGTON/New Delhi, August 27 (Reuters) – President Donald Trump has burned to up to 50%, as scheduled for double tariffs on goods from India on Wednesday.
The punitive 25% tariff imposed by the purchase of Russian oil in India will be added to Trump’s past 25% tariff on many products from India. Among the highest that the US has been imposed on par with Brazil and China, 50% of goods such as clothing, jewelry and jewelry, footwear, sports goods, furniture and chemicals are also required.
The new tariffs are threatening thousands of small exporters and jobs, including Prime Minister Narendra Modi’s hometown in Gujarat.
India’s Commerce Ministry did not immediately respond to a request for comment. But a Commerce Department official who spoke on condition of anonymity said exporters who were hit by tariffs would be encouraged to diversify into markets such as China, Latin America and the Middle East.
The US Customs and Border Protection Notice to shippers provides a three-week exemption for Indian goods loaded onto the ship and transported to the US before the midnight deadline. These items will be allowed into the US at previous tariff rates prior to the 12:01am EDT (0401 GMT) on September 17th.
Also exempts steel, aluminum and derivative products, passenger cars, copper and other goods subject to separate tariffs of up to 50% under Section 232 National Security Trade Act.
Officials from the Indian Ministry of Trade said the average tariff on US imports is around 7.5%, with the office of US trade representatives highlighting a rate of up to 100% on automobiles and an average applied fee of 39% on US agricultural products.
Failed lecture
As the midnight activation deadline approached, US authorities gave India no hope to avoid tariffs.
“Yes,” White House trade adviser Peter Navarro said on Wednesday when asked whether the increase in tariffs on India’s US-surrounded exports would come into effect, as previously announced. He did not provide any further details.
Wednesday’s tariff move follows five rounds of failed talks. Meanwhile, Indian officials were optimistic that US tariffs could be restricted to 15%.
Authorities on both sides have condemned political misjudgments and missed signals for the collapse of talks between the world’s largest and fifth largest economy. Their two-way commodity trade totaled $129 billion in 2024, with the US trade deficit of $45.8 billion, according to data from the US Census Bureau.
Exporters lose competitiveness
The exporter group estimates that the hike could affect nearly 55% of India’s $87 billion goods exports, and could benefit competitors such as Vietnam, Bangladesh and China.
“The move will disrupt India’s exports to the largest export market,” said SC Lalhan, president of the Indian Export Machines Association, who said about 55% of exports, including textiles, chemicals and leather, will face a price disadvantage of 30-35% against their competitors.
In addition to extending low-cost credits and facilitating loan availability, the government should consider a one-year moratorium on bank loans for affected exporters, he said.
Rajeswari Sengupta, professor of economics at Indira Gandhi Development Institute in Mumbai, said that the rupee will allow one way for the Rupee to provide indirect support to exporters, losing competitiveness and restoring lost competitiveness.
Sustained tariffs at this rate could hinder India’s widening appeal as an alternative manufacturing hub to China for goods such as smartphones and electronics.
The US-India standoffs have raised questions about the broader relationship between India and the US, a key security partner who shares concerns about China.
However, on Tuesday, the US State Department and the Indian Foreign Ministry issued the same statement that senior ministries and defense officials virtually met on Monday to “express their enthusiasm to continue to strengthen the breadth and depth of bilateral relations.”
The two sides also reaffirmed their commitment to the Quad, a partnership that connects the US and India with Australia and Japan.
(Reporting by David Lawder and Manoj Kumar, additional reports by Trevor Hunnicutt and David Brunnstrom of Washington, written by Nikunj Ohri and David Lawder of New Delhi, edited by Lincoln Feast.)
