WASHINGTON/NEW DELHI: US President Donald Trump on Wednesday slapped an additional 25 per cent tariff, raising it to 50 per cent, on goods coming from India as penalty for New Delhi‘s continued purchase of Russian oil, a move that is likely to hit sectors such as textiles, marine and leather exports hard.
The United States has imposed this additional tariff or penalty for Russian imports only on India while other buyers such as China and Turkey have so far escaped such measures. The 30 per cent tariff on China and 15 per cent on Turkey is lower than India’s 50 per cent.
Reacting to the development, India said that these actions are “unfair, unjustified and unreasonable”.
It is extremely unfortunate that the US should choose to impose additional tariffs on India, the external affairs ministry said in a statement, adding India will take all actions necessary to protect its national interests.
Trump signed an executive order – Addressing Threats to the US by the Government of the Russian Federation – imposing the additional tariff over and above the 25 per cent levy which comes into effect from August 7.
After this order, the total tariff on Indian goods, barring a small exemption list, will be 50 per cent.
“The ad valorem duty imposed…shall be in addition to any other duties, fees, taxes, exactions, and charges applicable to such imports…,” the order said.
While the initial duty becomes effective on August 7, the additional levy will come into effect after 21 days or August 27.
“I find that the Government of India is currently directly or indirectly importing Russian Federation oil. Accordingly, and as consistent with applicable law, articles of India imported into the customs territory of the United States shall be subject to an additional ad valorem rate of duty of 25 percent,” it said.
India buys about 88 per cent of its crude oil, which is converted into fuels like petrol and diesel, from overseas. Russian oil made up for hardly 0.2 per cent of all crude oil that India imported till 2021. After Moscow invaded Ukraine, Russian oil was available at a discount to international benchmarks due to western sanctions, and was quickly lapped up by Indian refiners. Russia is now India’s largest oil supplier.
In July, India imported about 5 million barrels of oil a day, of which 1.6 million came from Russia.
After the new levy, India will attract the highest tariff of 50 per cent along with Brazil. After this, India’s competitors will be much better placed in the US market as their duty is lower – Myanmar (40 per cent), Thailand and Cambodia (both 36 per cent), Bangladesh (35 per cent), Indonesia (32 per cent), China and Sri Lanka (both 30 per cent), Malaysia (25 per cent), Philippines and Vietnam (both 20 per cent).
The announcement comes at a time when a US team is scheduled to visit India from August 25 for the sixth round of negotiations for the proposed bilateral trade agreement (BTA).
The sectors, which will have to bear the brunt of these tariffs include textiles/ clothing, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and electrical and mechanical machinery.
The exempted goods, which will not be subject to the high tariffs, include pharmaceutical; energy products such as crude oil, refined fuels, natural gas, coal, and electricity; critical minerals; and a wide range of electronics and semiconductors, like computers, tablets, smartphones, solid-state drives, flat panel displays, and integrated circuits.
According to exporters, the move would affect India’s USD 86 billion worth of exports to the US severely.
“It is extremely shocking. It will impact India’s 55 per cent of exports to US,” Federation of Indian Export Organisations (FIEO) DG Ajay Sahai said.
In 2024-25, the bilateral trade between India and the US stood at USD 131.8 billion (USD 86.5 billion exports and USD 45.3 billion imports).
The announcement is being seen as a pressure tactic to get New Delhito agree to demands made by the US in the proposed BTA.
The US is seeking duty concessions on certain industrial goods, automobiles, especially electric vehicles, wines, petrochemical products, agri goods, dairy items, apples, tree nuts, and genetically-modified crops.
The two countries are aiming to conclude the first phase of the pact by fall (October-November) this year.
