Trump doubles down on India tariffs, raises it to 50%

TOI correspondent from Washington: US President Donald Trump slapped an additional 25 per cent penalty on most imports from India for buying Russian oil. Coming on top of the 25 per cent tariff he has already announced, this brings the taxes on goods and products India exports to the US to 50 per cent.

The executive order signed by Trump on Wednesday, citing threats to US national security because of India's purchase of oil from Russia, goes into effect on August 27, providing a three-week window of opportunity to negotiate an agreement. A US trade delegation is expected to visit India on before August 25.

Trump signed the executive order after a visit to Moscow by his special envoy Steve Witkoff that apparently failed to get the desired results on the Ukraine front. "I find that....the actions and policies of Russia continue to pose an unusual and extraordinary threat to the national security and foreign policy of the US," the EO said, making India a party to the threat because it is "directly or indirectly importing Russian Federation oil."

Earlier, asked about the US continuing to trade with Moscow and buying nuclear fuel and rare material from Russia while bearing down on New Delhi for buying Russian oil, Trump dodged the question saying, "I don't know anything about it..I'd have to check. We will get back to you on this."

As per US figures, the US goods and services trade with Russia in 2024 was an estimated $5.2 billion in 2024, including purchase of $1.3 billion of fertilizer, $ 878 million of precious stones and metals (including palladium) and $624 million of nuclear fuel (uranium).

While some Trump surrogates argued that the US-Russia trade had declined 25 per cent from 2023 to 2024 and was in a downward trajectory, others criticized the haste with which he has come down on India, jeapordising ties with a partner and the implications in the larger geo-political context.

"India should not be buying oil from Russia. But China, an adversary and the number one buyer of Russian and Iranian oil, got a 90-day tariff pause. Don’t give China a pass and burn a relationship with a strong ally like India," former Trump cabinet associate Nikki Haley, said shortly before the US President lowered the boom.

China, which accounts for 47 percent of Russian oil exports compared to India's 38 percent, got a 90-day pause in tariffs, ostensibly because it has leverage over the US with its control over supply of rare earth materials, among other exports. After initial bravado, Trump is now literally pawing the ground for a meeting with China's leader Xi Jinping.

The US accounts for between 17-20 percent of India's exports, making it less vulnerable than countries such as Mexico, 80 percent of whose exports go to the US. Still, the 50 percent tariff will be a significant blow to Indian industries such as gems and jewelry, apparel and garments, and seafood/shrimp. Countries such as Vietnam, Bangladesh, Pakistan, Ecuador are likely to get a leg up because of lower tariffs as they scramble for the US market.

Eventually, though, the US consumer will be paying higher prices for imports since no exporters from any country or importer in the US will trade at a loss even if the margins are squeezed. But by Trump's account, the US is already taking in billions and billions of dollars in revenue from tariffs -- mostly paid for by US importers who will soon been passing on the higher costs to consumers, according to most economists.

(More to follow)