50% Trump tariff on India kicks in today

Exporters seek urgent relief from govt, RBI

- Shreya Nandi

The US administration early Tuesday pressed through with its plan to impose a 50 per cent tariff on Indian goods with the Department of Homeland Security notifying that an additional 25 per cent levy, linked to India's oil purchases from Russia, would take effect from August 27, 9.30 am IST.

This levy, on top of the 25 per cent reciprocal tariff implemented from August 7, not only marks a virtual death knell for several sectors' export prospects in India's largest market, accounting for a fifth of its outbound shipments in 2024-25, but also poses the most pressing external risk for India's near-term growth and capital flows trajectory, according to experts.

A senior government official told Business Standard that trade with the US is largely not feasible with the steep 50 per cent tariff. Exporters will need to explore new markets as the US is no longer an option for many, he stressed.

Indian and US officials held a 2+2 Intersessional Dialogue on Monday where they advanced bilateral initiatives, discussed regional security developments, and exchanged perspectives on a number of shared strategic priorities, India's Ministry of External Affairs said on Tuesday evening. The MEA said the officials discussed trade and investment, energy security, including strengthening civil-nuclear cooperation; critical minerals exploration, counter-narcotics and counterterrorism cooperation, and more.

Even as textiles and apparel makers in Tirupur, Noida, and Surat have already halted production, according to India's apex exporters' body, trade think tank Global Trade Research Initiative (GTRI) flagged that as much as 66 per cent or two-thirds of India's exports to the US will be hit by the 50 per cent US tariff.