WASHINGTON: US tariffs of 50 per cent took effect on Wednesday on many Indian products, doubling an existing duty as President Donald Trump sought to punish New Delhi for buying Russian oil.

India has criticised the levies as “unfair, unjustified and unreasonable”, with its export body calling on Wednesday for government intervention to assuage fears of heavy job cuts.

Trump has raised pressure on India over the energy transactions, a key source of revenue for Moscow’s war in Ukraine, as part of a campaign to end the conflict.

The latest salvo strains US-India ties, giving New Delhi fresh incentive to improve relations with Beijing.

New Delhi notes limited immediate impact of new tariffs; pushes trade deals with other partners

But US Treasury Secretary Scott Bessent told Fox Business on Wednesday that Trump had good ties with Indian Prime Minister Narendra Modi. “I think at the end of the day, we will come together,” he said.

While Trump has slapped fresh duties on allies and competitors alike since returning to the presidency in January, this 50 per cent level is among the highest that US trading partners face.

Crucially, however, exemptions remain for sectors that could be hit with separate levies — such as pharmaceuticals, computer chips and smartphones. Industries that have already been singled out, such as steel, aluminum and automobiles, are similarly spared these countrywide duties.

The United States was India’s top export destination in 2024, with shipments worth $87.3 billion.

Exporters of textiles, seafood and jewelry were already reporting cancelled US orders and losses to rivals such as Bangladesh and Vietnam, raising fears of heavy job cuts.

Ajay Sahai, director general of the Federation of Indian Export Organisations, called for “liquidity support from the government”.

“We want to ensure that even if business stops, we are able to keep workers on the payroll,” he said, adding they were still optimistic for trade negotiations.

Immediate impact limited

The immediate impact of US tariffs on Indian exports appears limited, but the ripple effects on the economy pose challenges that must be addressed, India’s finance ministry said in its July monthly economic review, released on Wednesday.

The report by the finance ministry said ongoing India-US trade negotiations “will be crucial”.

India is pursuing a diversified trade strategy, which includes its recent trade deal with Britain and some European nations.

It also has ongoing talks with New Zealand and the European Union, among others, to sustain its “resilient trade performance”.

However, “these initiatives will take time to show results and may not fully address the shortfall in exports to the United States that may arise if the current tariff rates on India persist.”

Turning to India, the report said a recent sovereign rating upgrade by S&P, complemented by sweeping tax reforms and plans to simplify regulations, would reduce borrowing costs and attract greater foreign capital inflows.

Published in Dawn, August 28th, 2025