US trade shock: Trump goes ahead with plan to impose cumulative 50% tariffs on India citing Russian oil purchases
In a big setback for India’s exports, the US has formally notified 50 per cent tariffs on Indian products effective from Wednesday, after India-US ties deteriorated following the collapse of trade deal negotiations and US discomfort over India’s purchase of Russian oil amid the ongoing Russia-Ukraine war.
In its notification, the US Customs and Border Protection (CBP) said the implementation of additional duties comes after US President Donald Trump determined that the “Russian Federation’s actions continue to pose an unusual and extraordinary threat to US national security and foreign policy, and India is directly or indirectly importing Russian Federation oil”.
The legal authority for this order stems from statutes such as the International Emergency Economic Powers Act (IEEPA), CBP said.
“This new duty will be effective for products entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Daylight Time on August 27, 2025,” the order read.
The US order, however, has exempted tariffs on items such as passenger vehicles, iron and steel and copper items which already has 50 per cent tariffs. Phrama and electronic goods are also part of the exemption list.
Trade experts said the imposition of a 25 per cent tariff on imports of goods from India into the United States will have a significant impact on the earnings of companies in sectors such as diamond polishing, shrimp, home textiles and carpets.
“The move to impose an additional 25 per cent tariff with effect from August 27, 2025, as a penalty for importing crude oil from Russia, will make Indian exports to the US unviable for the aforesaid sectors as well as others including ready-made garments (RMG), chemicals, agrochemicals, capital goods and solar panel manufacturing, which have sizable trade exposure to the US,” Crisil Ratings said.
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The extent of the impact will vary depending on exposure, ability to pass on incremental costs to customers, and relative tariff disadvantage versus competing nations, experts said, adding that a potential second-order impact – including a slowdown in US demand and disparate tariffs across nations that could alter global trade dynamics – also warrants close monitoring.
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