President Donald Trump has pledged that a 50% tariff on India would come into effect on Wednesday. This is because the United States risks blowing away relationships that are considered important in its efforts to counter China’s rise.
Trump launched tariff rates at 25%, but doubled it earlier this month as a punishment for India for purchasing Russian oil. India currently has one of the highest of many tariffs imposed during Trump’s ongoing world trade war.
Duties are taxes on imports, paid by American import companies, and additional costs are often passed on to consumers. According to US government figures, goods imported from India in 2024 were worth $87.3 billion, up 4.5% the previous year.
The reversal was an explosion of positive positions that India seemed to enjoy early in the Second Trump administration, due to the expansion of American economic ties and personal relationships between Trump and Prime Minister Narendra Modi.
Vice President JD Vance, whose wife is a daughter of Indian immigrants, told NBC’s “media” on Sunday that the US will apply “aggressive economic leverage” to India, “trying to make it difficult for Russians to get rich from the oil economy.”
Despite opposition from India, the US continued its threat. This could hit half of India’s exports and affect the influence of merchants diversifying into other markets such as Latin America and the Middle East.
Meanwhile, the US is India’s largest trading partner.
A 50% taxation puts decades of warming in bonds between the US and India. The Indian stock market remained closed on Wednesday due to public holidays.
Modi vowed to protect the country’s farmers and small businesses.
“For me, the interest in farmers, small businesses and dairy products is at the top. My government ensures they are not affected,” Modi said at a rally in Gujarat this week.
India and the US have yet to reach a bilateral trade agreement, even after five rounds of negotiations. That’s largely because India doesn’t want to open these sectors to cheaper American imports, as it could threaten the livelihoods of millions of Indians. Indian leaders are also under enormous domestic pressure to not fall into unilateral US demands.
Trump also appears to pay tribute to his demand for India to stop buying Russian oil as India shifts its recent focus to mediate peace in Ukraine.
Ironically, the ongoing purchase of Russian oil in India will be notified by past US demands to keep oil prices low amid Western-led sanctions in Russia.
“They bought Russian oil because they wanted them to buy Russian oil under President Joe Biden,” Eric Garcetti, US ambassador to India, said at a meeting last year. “It was actually a policy design, because as a product, we didn’t want oil prices to rise.”
