As a result of Donald Trump’s threat to punish New Delhi for purchasing subsidized Russian oil, the US has doubled its import tariffs to 50%.
By threatening trade with India’s largest export market, the steep tariffs, which went into effect on Wednesday, could have a significant impact on the country’s economy. In 2024, India exported goods worth more than $87 billion to the US.
The Indian government estimates that the tariffs will have an impact on exports worth more than $48 billion, which has been criticized as “unfair, unjustified, and unreasonable.” According to The Associated Press news agency, Indian officials warn that the new duties could cause job losses and slow growth in the country’s fifth-largest economy.
Since Trump’s return to the White House, 25% tariffs on Indian goods have already been levied by the US as part of a wave of additional duties on goods from both allies and rivals.
The White House claims that buying Russian oil, which the White House claims indirectly funds Russia’s war on Ukraine, is doubled as a result of the most recent increase in Indian products.
Russia accounted for more than one-third of India’s crude oil imports last year, which has drawn criticism from Washington. Last week, Peter Navarro, Trump’s trade adviser, stated to reporters that “India doesn’t seem to want to acknowledge its role in the bloodshed in Ukraine.”
With the new regulations, Indian exporters are subject to one of the highest US duties that Trump has imposed on imported goods. Brazilian exports to the US are also subject to 50% tariffs.
“Strategic shock”
The impact, according to Garima Kapoor, executive vice president and economist at Elara Securities, is likely to be felt in labor-intensive sectors like leathers, textiles, clothing, gems and jewelry, and some auto exports.
“All of these categories are focused on small and medium-sized businesses. So we’ll likely see a pretty severe employment impact.
According to a New Delhi-based think tank called Global Trade Research Initiative (GTRI), the tariffs may result in India’s exit from the US.
Ajay Srivastava, founder and former Indian trade official, told the AP that the new tariff regime is a strategic shock that threatens to end India’s long-standing presence in the US, causing unemployment in export-driven hubs, and weakened its position in the industrial value chain.
For the time being, the US has temporarily exempted some important industries from additional tariffs, including pharmaceuticals and electronic goods. These and other sectors are the subject of investigations that the Trump administration has begun, with the possibility of adding more duties.
The Trump administration is enforcing greater access to India’s dairy and agricultural sectors as a result of Indian opposition to opening these sectors to less expensive US imports.
India should not succumb to the pressure, according to Prime Minister Narendra Modi.
Source: Aljazeera
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