WASHINGTON, Aug 27 (APP): US President Donald Trump’s promised 50% tariffs on India took effect on Wednesday, threatening a serious blow to the South Asian country’s overseas trade in its largest export market.
Trump started the tariff rate at 25% but doubled it earlier this month as punishment for India buying Russian oil, making it one of the highest of the many tariffs imposed during his ongoing global trade war.
The Indian government estimates the tariffs will impact $48.2 billion worth of exports. Officials have warned the new duties could make shipments to the U.S. commercially unviable, triggering job losses and slower economic growth.
India–U.S. trade relations have expanded in recent years but remain vulnerable to disputes over market access and domestic political pressures. India is one of the fastest-growing major global economies and it may face a slowdown as a result.
Estimates by New Delhi-based think tank Global Trade Research Initiative suggest labour-intensive sectors such as textiles, gems and jewelry, leather goods, food and automobiles will be hit hardest.
The action, confirmed in a notice by the US Department of Homeland Security earlier this week, prompted some economists to predict a precipitous fall in trade between the two countries.
“I don’t care what India does with Russia,” Trump claimed on Truth Social, his social network, last month. “They can take their dead economies down together, for all I care.”
But India has refused to halt purchases of Russian oil, with Prime Minister Narendra Modi appealing to Indians to buy local.
“All of us should follow the mantra of buying only ‘made in India’ goods,” he said on Tuesday, encouraging shopkeepers to display big signs promoting domestic products. “Pressure on us may increase [from the tariffs], but we will bear it,” he added.
Goldman Sachs’s chief India economist, Santanu Sengupta, warned that sustained 50% levies could push gross domestic product (GDP) growth below 6%, from a forecast level of around 6.5%. Rival exporters from Turkiye to Thailand, facing lower US tariffs, are already scooping up American buyers with offers of cheaper goods.
About 30% of India’s exports to the US – including pharmaceuticals, electronics, raw drug materials and refined fuels – worth $27.6bn, remain duty-free. But sectors like textiles, gems and jewellery, and seafood, long reliant on the American market, face shrinking order books. “At a 50% tariff, it is very difficult to export,” Sengupta said.
The effects are already visible. The Federation of Indian Export Organisations (FIEO) reported textile and apparel manufacturers in Tirupur, Delhi and Surat had already halted production due to “worsening cost competitiveness”.
“Indian goods have been rendered uncompetitive compared to competitors from China, Vietnam, Cambodia, the Philippines and other south-east and south Asian countries,” said FIEO president SC Ralhan.
Indian shares tumbled before the tariffs, with the benchmark BSE Sensex dropping 1%, or 849 points, to 80,876 in Mumbai on Tuesday, according to media reports.
The US, India’s largest export market, accounts for nearly a third of shipments in key sectors such as gems and jewellery and textiles, highlighting the potential economic impact.
Even if the tariff row eases, trust in future relations with Washington is probably the biggest casualty, it was pointed out.