On Wednesday, the US President Donald Trump made the biggest slap on India-US trade relations by imposing a combined 50% tariff on Indian goods. The initial was a 25% tariff which is likely to take effect Thursday. And it will take 21 days for the remaining 25% to take effect. It is in response to the continued purchase of Russian oil by the Government of India, making it one of the severe US tariffs on India ever imposed. This article explains its possible meaning and outcomes.
Official Statement by the White House
Targeting Russian Oil Ties with Secondary Sanctions
Trump is making use of secondary sanctions by punishing nations who are directly and indirectly funding Russia. The executive order outlines that India is “currently directly or indirectly importing Russian Federation oil,” justifying the tariffs on India reasonable.
Foreign Policy Meets Trade Strategy
The executive order released by Trump’s office is expected to be an outcome of a high level meeting between his foreign representative Steve Witkoff and Russian President Vladimir Putin in Moscow. The order claimed to have taken sources from “additional information” from top US officials about Russia’s involvement in Ukraine.
Trump has already accused New Delhi of funding the Ukraine conflict indirectly by buying Russian oil. Trump has even warned on Tuesday of increasing the tariffs as India continues to buy oil from Russia.
India Responds: Energy Security Comes First
The Ministry of External Affairs marked the tariffs measures as “unjustified and unreasonable”. The Ministry claimed that it had already clarified their energy imports are guided by market rates and vision to feed a large population of 1.4 billion people at affordable resources. India gave signs on taking retaliatory actions on American goods as well by stating it would “take all actions necessary to protect its national interests.”
Is India Under Pressure?
The tariffs escalation by the Trump led US government has disrupted the India US trade ties. With the initial hike of 25% tariffs, RBI has managed to keep its repo rate at 5.5% and is expected to mark GDP growth projection for FY26 at 6.5%. The RBI also reported a drop in the inflation rate to 3.1% from 3.7% as well.
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50% US Tariff on India: But, upon the recent 25% tariff hike, making a comprehensive 50% tariff hike, it will be interesting to see how the RBI and Governor Sanjay Malhotra shall respond to it.
Trade Talks in Trouble
It seems that the tariff drama is in response to the recent collapse of PM Modi’s visit to the US. Trump has always demanded reciprocal trade agreements and greater access to Indian markets as well. It has been estimated that the recent visit to the US failed to crack a breakthrough deal and tensions have exponentially worsened since.
What’s at Stake for India–U.S. Relations
The primary aim of this increased tariff on India is to isolate Russia economically as India is one of the major buyers of Russian oil. With this, the White House aims to choke off Moscow’s military conflict with Ukraine.
Trump tariffs on India are set to adversely affect various developing fields of the nation including science and technology, defence and space exploration as well if this situation worsens.
Looking Ahead: Diplomacy or Disruption?
The impact of recent US tariffs on India is surely making the news everywhere but it will be interesting to see how India will respond to these rising tariffs by the US. The upcoming visit to China and Japan from PM Modi may address similar issues as well.
50% US Tariff on India: The next few weeks will be very critical for the India US trade relations as India’s reaction to this scenario will set the stage for future terms.
Easiest Way to Establish Peace
It is a strong possibility that the trade tensions between India and the US are expected to create problems for the common people. It also reflects the growing instability and political influence in this world. Jagatguru Tatvdarshi Sant Rampal Ji Maharaj offers the ultimate way to escape this brutal trap of karmic bondage and sufferings.
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