India braces for economic shock over US tariffs
India is preparing for the economic and political ripple effects after US President Donald Trump slapped a 50 percent tariff on Indian exports, Arab News reported on August 10th.
The steep hike in US trade duties is linked to India’s continued purchase of Russian oil, which US officials claim helps fund Moscow’s war in Ukraine. This development comes as NATO Secretary-General Mark Rutte warned countries, including China, India, and Brazil, that they could face sweeping secondary sanctions if they persist in trading with Russia without pushing Moscow toward peace talks. Stephen Miller, Trump’s Deputy Chief of Staff, said the oil imports amounted to “financing” Russia’s invasion.
The new tariffs, among the steepest Washington has ever imposed on a major trading partner, are set to take effect in September. While India’s Ministry of External Affairs has pledged to “take all actions necessary to protect its national interests,” analysts warn New Delhi has limited options to overturn the decision.
Manoj Joshi, a member of the Observer Research Foundation, explained that “It will have economic repercussions if things are not changed. Fifty percent is a lot, and it will affect us. Right now, there is an exemption for pharmaceuticals, but in other areas, there will be an impact.”
Trade talks between the two countries have stalled since Trump imposed an initial 25 percent tariff in April. Washington has pushed for wider access to Indian markets in sectors such as cars, steel, aluminium, and dairy, demands New Delhi has resisted.
“India is not going to compromise on agriculture and dairy products. India will find it very difficult to stop buying Russian oil. There is not much room for any kind of concessions from India’s side,” Joshi added.
The US accounts for 18 percent of India’s exports, equal to 2.2 percent of GDP. Economists estimate the tariff hike could shave 0.2 to 0.8 percentage points off growth.
The ripple effects of US tariffs are being felt beyond India. In South Africa, the 30% import tariffs set to take effect on August 1st have the potential to cost over 100,000 jobs and worsen an already severe unemployment crisis, experts warn.
Amid the rift, Prime Minister Narendra Modi will travel to China for the Shanghai Cooperation Organization summit, marking his first visit there since the 2020 Galwan Valley clashes, and has invited Russian President Vladimir Putin to New Delhi later this year.
Arab News, Maghrebi.org
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