Sharply escalating the trade tensions with India, US President Donald Trump on Wednesday announced imposing an additional 25% tariff on Indian goods. The move comes in response to New Delhi’s continued purchases of Russian oil and defence equipment. After the order, the total tariff on Indian goods, barring a small exemption list, will be 50 per cent.
Trump signed an executive order imposing the additional tariff less than 14 hours before his initial tariffs were to come into effect. The decision is expected to strain India-US trade ties and could massively impact sectors like pharmaceuticals, textiles, and machinery.
The tariffs would go into effect 21 days after the signing of the order, meaning that both India and Russia might have time to negotiate with the administration on the import taxes.
The move comes a day after Trump said that India has not been a good trading partner and announced that he will raise the tariffs on New Delhi “very substantially” over the next 24 hours because it is buying Russian oil.
Trump has accused New Delhi of "financing” the Ukraine war by purchasing oil from Russia. India, on the other hand, maintains that
On August 1, Trump had signed an Executive Order titled ‘Further Modifying The Reciprocal Tariff Rates’, raising tariffs for over five dozen countries, including a steep 25 per cent for India.
The executive order, however, did not mention the “penalty” that Trump had said India will have to pay because of its purchases of Russian military equipment and energy.
Responding to the allegations levelled by Trump, India on Tuesday mounted an unusually sharp counterattack on the US and the European Union for their “unjustified and unreasonable” targeting of New Delhi for its procurement of Russian crude oil.
Firmly rejecting the criticism, India pointed out the double standards in targeting it on the issue and said both the US and the EU are continuing their trade relations with Russia.
“Unlike our case, such trade is not even a vital national compulsion,” the Ministry of External Affairs (MEA) said in a statement.
The Europe-Russia trade includes not just energy, but also fertilisers, mining products, chemicals, iron and steel, and machinery and transport equipment, the MEA said.
“Where the US is concerned, it continues to import from Russia uranium hexafluoride for its nuclear industry, palladium for its EV industry, fertilisers as well as chemicals,” it added.
“In this background, the targeting of India is unjustified and unreasonable. Like any major economy, India will take all necessary measures to safeguard its national interests and economic security,” the MEA said.
Russia and China have expressed their support to India, saying New Delhi has the right to select its trade partners.
“We believe that sovereign countries must have and do have the right to choose their trade partners, the partners in trade and economic cooperation, on their own and independently determine those modes of trade and economic cooperation that suit the interests of a country in question,” Kremlin Spokesman Dmitry Peskov told journalists, commenting on the US’ threats regarding India.
Similarly, a Chinese embassy spokesperson quoted a recent editorial that said that New Delhi's foreign policy choices cannot be manipulated by other countries.
Yu Jing, the Chinese embassy spokesperson in India, quoted an editorial published in The Hindu about how India is pushing back against bullying tactics by US and European Union.
She cited the following line from the article: “India’s sovereignty is non-negotiable and its foreign policy choices cannot be manipulated by other countries, no matter how significant their own ties with India are."
These announcements by Trump are being seen as a pressure tactic to get New Delhi to agree to demands made by the US in the proposed trade agreement with India. The US is seeking duty concessions for its agriculture, dairy and genetically modified (GM) foods. India is against giving any concessions in these sectors as they involve the livelihood of millions of small and marginalised farmers.
So far five rounds of negotiations have been held between the two countries. For the next round of talks, the US team is coming to India on August 25. The talks will go on till August 29.
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