Trump Hikes India Tariffs to 50% Over Russian Oil Trade Concerns

• U.S. raises India tariffs to 50%—highest level targeted at Indian goods.
• Move tied to India’s Russian oil imports; punitive and impactful.
• Likely to severely dent export competitiveness, GDP growth targets.

In an aggressive escalation of trade tensions, U.S. President Donald Trump has issued an executive order increasing tariffs on Indian imports to 50%, levying an additional 25% tax on top of existing tariffs. The order will go into effect 21 days from August 6, allowing a small window for diplomatic negotiations.

The rationale for the order stems from India's insistence on buying Russian oil, while the U.S. is attempting to isolate Russia for its invasion of Ukraine. Should tariffs remain as ordered, this would place it among the highest taxed imports at the U.S. border. This might subtract 0.3 - 0.4 percentage points from India's GDP growth

Also Read: Trump Imposes 25% Tariff on India, Penalizes Russia Deals

In a fast-moving statement, India's Ministry of External Affairs strongly condemned the action as being "extremely unfortunate, unjustified and unreasonable," adding that India's oil imports are good market needs. The action will cause serious disruptions to Indian exports - lowering the competitiveness of goods such as textiles, machinery, gems and pharmaceuticals, in the U.S. marketplace.

Economists and trade analysts warn the increase could derail India's goal to double bilateral trade to $500 billion by 2030. And with no immediate retaliatory measures, the decision puts strain on the once cordial relations fostered under PM Modi, and it risks changing the course of export flows to more tariff-favorable markets.