The United States has imposed a steep 50% tariff on Indian-origin goods effective Wednesday (August 27), in retaliation for New Delhi’s continued imports of discounted Russian oil.
According to a notice issued by the U.S. Department of Homeland Security, the new levies apply to goods entered for consumption—or withdrawn from warehouses for consumption—on or after 12:01 a.m. EDT on August 27.
President Donald Trump said the measure is intended to advance peace negotiations with Russia over Ukraine, claiming India’s trade with Moscow amounts to “indirect funding of Russia’s war.”
Modi pushes Swadeshi response
Speaking in Ahmedabad, Indian Prime Minister Narendra Modi strongly criticized the U.S. decision, vowing to safeguard the interests of farmers, herders, and small-scale industries. He urged citizens to prioritize Swadeshi goods and stressed that India would withstand external pressure.
Foreign Minister Subrahmanyam Jaishankar confirmed that negotiations with Washington are ongoing but gave no indication that India would halt its Russian oil purchases. Commerce ministry officials acknowledged that prospects for immediate relief are slim, but pledged financial support for affected exporters, including loan subsidies and diversification into other markets.
Exporters brace for heavy losses
The U.S. is India’s single-largest export destination, accounting for 55% of its $87 billion outbound trade. With the tariff in place, exporters warn of severe disruption, with some sectors expecting losses as early as September.
The Engineering Exports Promotion Council reported paused orders and cautioned that competitors such as Vietnam, Bangladesh, and China could benefit from India’s setback. The Indian government has identified new export opportunities in textiles, processed foods, leather, and marine products to offset the damage.
Already, pressure is mounting on local industries. In Tiruppur, Tamil Nadu—responsible for nearly a third of India’s garment exports to the U.S.—factories have slowed production amid reduced orders. In Surat, Gujarat, the diamond-polishing hub, some workers have been sent on unpaid leave as output declines.
Trump warns of wider impact
The tariff shock is also rippling through aquaculture. India exports more than 60% of its shrimp to the U.S., but additional duties could push total levies past 60%, forcing farmers to scale down production. Analysts warn that the move could devastate livelihoods tied to shrimp farming.
Markets reacted swiftly: the Indian rupee fell 0.2% to 87.75 per USD, while benchmark indices dropped 0.7%. Economists warn the tariff could shave off nearly 0.8 percentage points from India’s growth in both 2025 and 2026, despite planned domestic tax cuts.
Tariff talks between the two countries collapsed five times earlier this year, largely over U.S. demands for greater access to India’s agricultural market—a stance Modi has firmly resisted.
Reaffirming his call for self-reliance, Modi urged citizens to adapt through diversification while pledging to deepen partnerships with Russia and China despite mounting trade restrictions.
—Agencies
