Recently, the USA President has announced an additional 25% tariff on all imports from India for India’s continued purchases of Russian oil, totaling 50% of tariff.
Key Facts About News :
- India’s high tariffs on U.S. goods, which the US President called ‘among the highest in the world’. The US has about a $40.8 billion trade deficit with India.
- The US accuses India of maintaining high tariffs and other non-tariff barriers, particularly citing India’sagricultural subsidies and sanitary and phytosanitary(SPS) measures related to food safety.
- India’s status as Russia’s largest energy buyer which accounts for 35–40% of India’s total oil imports and its long-standing defense ties with Moscow…
- The penalty component of the tariff is reportedly linked to these purchases, though its exact nature unspecified.
- The US views BRICS, the emerging markets bloc which India is part of, as an anti-dollar coalition that challenges US economic leadership.
- A mini-deal to avoid retaliatory tariffs was not finalized before the August 2025 deadline, despite ongoing talks since February 2025.
Key Implications :
- Economic Impact on Indian Exports: The tariff affects $129 billion in annual bilateral trade, with India’s exports to the U.S. valued at $86.5 billion in FY25.
Most Vulnerable Sectors which impact :
1) Pharmaceuticals: India is a major supplier of generic drugs to the U.S.
2) Auto Parts & Engineering Goods: $2.2 billion worth of auto components exported in 2024 now face full
tariffs.
3) Textiles, Gems & Jewellery, Electronics, and Seafood: These export-heavy sectors may lose price
Competitiveness :
- Pressure on MSMEs and Labour-Intensive Industries could disproportionately affect small manufacturers and exporters, especially in labourintensive sectors like garments, leather, and handicrafts. Industry bodies like FICCI warn of immediate disruption to India’s export-intensive sectors.
- The penalty component is linked to India’s energy and defense ties with Russia, making this tariff not just economic but geopolitical, visit here
- India’s strategic autonomy in foreign policy especially its stance on Russia may face renewed scrutiny
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