Trump hits India with 25% tariff, plus penalty

Move comes after two nations fail to seal interim trade deal; govt says will take steps necessary to secure national interest

- SHREYA NANDI

US President Donald Trump on Wednesday announced a 25 percent tariff on exports from India starting August 1, along with an unspecified penalty to be imposed for India's defense and energy procurements from Russia. This may have a significant adverse impact on India's shipments to its largest market that accounts for about a fifth of its exports.

President Trump's unilateral pronouncement of the levy came early morning Washington time (5:39 pm IST) and caps the inability of India and the US to strike an interim trade deal after five rounds of intense negotiations before August 1, when the US is set to implement steep, country-specific reciprocal tariffs for trading partners.

An interim deal was intended to serve as a precursor to the first tranche of the bilateral trade agreement (BTA), which Prime Minister Narendra Modi and Trump in February had decided to finalize by September-October, and India had hoped to avoid the 26 percent reciprocal tariff Trump had announced for its goods in April.

As it turns out, the levy on Indian exports to be effective from August 1 is only marginally lower. Currently, Indian exporters bear a 10 percent baseline tariff, over and above the existing World Trade Organization (WTO)-compatible duties.

"Remember, while India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary trade barriers of any country. Also, they have always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of energy, along with China, at a time when everyone wants Russia to stop the killing in Ukraine—all things not good!" Trump said on his social media platform Truth Social.