India braces for Trump’s 50% tariff on exports

The United States’ 50% tariff on imports from India took effect on Wednesday, doubling the previous 25% rate.

President Donald Trump announced the measure as punishment for New Delhi’s continued purchases of Russian oil. In addition to the existing 25% US tariff on many Indian products, a punitive 25% surcharge has now been imposed.

Clothing, jewelry, footwear, sporting goods, furniture, and chemicals are among the sectors most affected, facing a total tariff of up to 50%—one of the highest rates applied by Washington, on par with those levied on Brazil and China. However, exemptions remain for key industries such as pharmaceuticals and computer chips.

As the measure came into force, Trump posted a photo of himself with an oil barrel on Truth Social, captioned “America First” and “America is back.” His trade adviser, Peter Navarro, told reporters last week, “It appears India does not want to acknowledge its role in the bloodshed.”

Strains on US-India trade relations

Trade between India and the US has expanded in recent years, though disagreements over market access remain. After Prime Minister Narendra Modi’s visit to Washington, the two nations launched talks in February on a large-scale trade agreement aimed at boosting annual bilateral trade to $500 billion by 2030. But the fate of these negotiations is now uncertain amid the new tariff escalation.

India resists US pressure

India has vowed to stand firm. Prime Minister Narendra Modi declared he would “never compromise” on protecting farmers’ interests.

Government estimates suggest that the tariffs will affect $48.2 billion worth of exports. Officials warned that the new rates could render shipments to the US commercially unviable, leading to job losses and slower economic growth.

Former Foreign Secretary and Rajya Sabha MP Harsh Vardhan Shringla said New Delhi is seeking to soften the blow by diversifying its markets. “We have signed Free Trade Agreements with Australia, the UAE, and the UK, and we are close to signing one with the European Union. This allows us to redirect part of our exports,” he explained.

Shringla added that while the US relationship remains broader and deeper than with other nations, “shared values and principles” would help the partnership weather this turbulence. He also welcomed the appointment of Sergio Gor as the next US ambassador to India, calling it a positive development.

Impact on India’s economy

A new SBI Research report projects that the tariffs could reduce India’s GDP growth by 40–50 basis points and fuel higher input cost inflation.

“Since $45 billion worth of exports will be hit by the 50% tariffs, India’s trade surplus could turn into a deficit in the worst-case scenario. However, renewed trade negotiations may help restore confidence and revive exports to the US,” the report said.

The tariff hike could erode India’s competitiveness compared to Asian peers. While Indian goods now face a 50% rate, comparable US tariffs on imports from China stand at 30%, Vietnam at 20%, Indonesia at 19%, and Japan at 15%.

The report noted that the US remains India’s largest export market for textiles, a sector where India has steadily gained market share as China’s has declined over the past five years. Jewelry and gems exports also face major disruption, with the US accounting for nearly a third of India’s $28.5 billion annual shipments.

Shrimp exporters, who send over half their production to the US, fear massive losses and order cancellations. This could also raise prices for American consumers, making Ecuadorian suppliers more competitive.

Former US trade official Wendy Cutler acknowledged India’s historically tough stance on trade but noted the country had undertaken reforms. “High tariffs, however, have rapidly eroded trust between the two countries, and rebuilding it could take years,” she cautioned.