US-India Relationship Upended by Sharp Tariff Increase

Seema Sirohi, author of 'Friends with Benefits: the US-India Story,' breaks down the impact of President Trump's decision to place a 50% tariff on India for continuing to buy Russian oil. She discusses what the it means for the US-India relationship, as well as India's place in the region -- including its growing ties with Russia and China.

President Donald Trump imposed a crushing 50% tariff on Indian goods to punish the country for buying Russian oil, upending a decades-long push by Washington to forge closer ties with New Delhi.

The new tariffs, the highest in Asia, took effect at 12:01 a.m. in Washington on Wednesday, doubling the existing 25% duty on Indian exports. The levies will hit more than 55% of goods shipped to the US — India’s biggest market — and hurt labor-intensive industries like textiles and jewelry the most. Key exports like electronics and pharmaceuticals are exempt, sparing Apple Inc.’s massive new factory investments in India for now.

The move marks a sharp deterioration in ties for the two nations and an about-turn in Washington’s strategy over the years to court India as a counterweight to China. Trump has slammed India for buying Russian oil, which he said was funding President Vladimir Putin’s war in Ukraine. New Delhi has defended its ties with Russia and has called the US’s actions “unfair, unjustified and unreasonable.”

The sky-high tariffs threaten India’s export competitiveness against rivals like China and Vietnam, while raising questions about Prime Minister Narendra Modi’s ambitions to transform the South Asian nation into a major manufacturing hub.

Exporters of clothing, footwear and small manufactured goods like toys are bracing for falling orders and possible job cuts.

“This is going to be a very big impact on Indian exporters because 50% tariffs are not workable for the clients,” said Israr Ahmed, managing director of Farida Shoes Pvt. Ltd., which depends on the US for 60% of its business. He says buyers have asked exporters to share specification of goods with suppliers in other nations, increasing the threat of orders being diverted to countries like Bangladesh and Vietnam.

India’s Ministry of Commerce and Industry didn’t respond to a request for comment on Wednesday.

India’s Ministry of Commerce and Industry didn’t respond to a request for comment on Wednesday.

The tariffs have stunned Indian officials, and follow months of trade talks between New Delhi and Washington. India was among the first countries to open trade talks with the Trump administration, but its own high tariffs and protectionist policies in sectors such as agriculture and dairy have frustrated US negotiators.

Relations further soured after Trump lashed out at India over its buying of Russian oil. New Delhi has argued the purchases stabilize energy markets, and has said it will keep buying Russian oil “depending on the financial benefit.”

Tensions have also simmered over Trump’s repeated claims that he brokered a ceasefire between India and Pakistan after a four-day armed conflict in May. The US president has said he used trade deals as a bargaining chip in the truce, comments that Modi and his top officials have consistently denied.

Trump repeated those assertions at the White House on Tuesday, describing Modi as a “terrific man,” who he said he called to prevent the India-Pakistan conflict from escalating to a nuclear war.

China, Russia Ties

The fraying relationship has pushed India to edge away from the US and forge deeper ties with fellow members of the BRICS bloc. Beijing and New Delhi have in recent months sought to patch up ties that had plummeted after violent border clashes in 2020, with Modi expected to meet President Xi Jinping on the sidelines of a security summit in China next week — his first visit there in seven years.

At the same time, India and Russia have pledged to increase their annual trade by 50% to $100 billion over the next five years.

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