US President Donald Trump has just announced that he will impose a 25% tariff on imported goods from India starting from August 1, along with unknown sanctions related to the country's purchase of weapons and oil from Russia. This move threatens to increase tensions in relations between the US and the world's most populous country.
In a post on Truth Social, Mr. Trump said that the US has done little business with India for many years because the country has one of the worlds highest tariffs and the most severe and obstacious non-tax barriers. He also criticized India for buying the majority of its military equipment from Russia and becoming the country's largest energy customer, along with China.
The White House has warned India of an average import tax of nearly 39% on agricultural products, and that the tax could be as high as 50% on items such as apples, corn and vegetable oils. Currently, the US is running a trade deficit of about 45.7 billion USD with India.
White House economic adviser Kevin Hassett said Trump was unhappy with the progress of trade negotiations, and believed that the imposition of tariffs would create pressure to promote this process. Meanwhile, the Indian side said it is studying the impact of the new decision and is still committed to pursuing a fair, balanced and mutually beneficial trade deal.
The Federation of Export Organizing Trade of India warned that the 25% tax rate will severely affect key export industries such as textiles, footwear and furniture, making Indian goods less competitive than countries that are under lower taxes than the US. Meanwhile, the Indian rupee fell 0.4% against the USD after the announcement.
Disagreements between the two countries have lasted for many months, especially regarding the US's request to open the Indian market for US agricultural and dairy products. The March report also highlighted concerns about India's increasingly complex import quality requirements.
Although the two sides had pledged to reach the first phase of the trade deal in the fall of 2025 and increase bilateral turnover to 500 billion USD by 2030, the current tensions have made political relations fragile. According to experts, trust between the two countries is at its lowest level since the mid 1990s.
On July 30, President Donald Trump also signed executive decrees imposing a 50% tax rate on Brazil, a 50% tax rate on some copper products, and suspending tax incentives for all countries that allow the transportation of cheap packages into the US free of tax.
Mr. Trump also said he would keep the deadline of August 1 to impose tariffs on countries that have not yet signed a new trade agreement with the US.
On the social network Truth Social, Mr. Trump emphasized that the deadline of August 1 will still be valid and will not be extended, and called this a "big" day for the United States.
