US president has argued New Delhi is indirectly helping fund the Ukraine war, as experts say the move is an “own goal” against an ally.
Donald Trump imposed 50% tariffs on most US imports from India, making good on a threat to punish one of the world’s largest economies over its purchases of discounted Russian oil. The tariffs, which came into effect just after midnight on Wednesday in Washington, risk inflicting significant damage on the Indian economy and further disrupting global supply chains.
US tariffs of 25% on Indian goods went into force earlier this month, but Trump announced plans to double the rate, citing New Delhi’s purchases of Russian oil, which the White House argued is indirectly funding Russia’s war against Ukraine.
The US president has significantly increased tariffs on goods from much of the world since reentering the White House in January, straining relations with allies and rivals alike and fueling fears of higher inflation. This latest move leaves Indian exporters facing among the highest US duties Trump has imposed on foreign goods. Brazil is also grappling with 50% tariffs on its exports to the US.
Indian ministers argue the country has been unjustly singled out for its trade with Russia and warn it will likely work more closely with Moscow and Beijing — drifting further from Washington — as a result. Most Indian exports to the US, worth $87.3 billion last year, now face steep duties, though some key products including smartphones are temporarily exempt.
The action, confirmed earlier this week by the US Homeland Security Department, has led economists to predict a sharp drop in trade between the two countries.
“I don’t care what India does with Russia,” Trump claimed last month on Truth Social. “They can take their dead economies down together, for all I care.”
In India, the response has been defiant. The government has refused to halt purchases of Russian oil, and prime minister Narendra Modi urged Indians to buy domestic goods. “All of us should follow the mantra of buying only ‘Made in India’ goods,” Modi said on Tuesday, encouraging shopkeepers to display signs promoting local products. “Pressure on us may increase [from the tariffs], but we will bear it,” he added.
Santanu Sengupta, chief India economist at Goldman Sachs, warned that sustained 50% tariffs could push GDP growth below 6%, down from the forecast 6.5%. Rival exporters from Turkey to Thailand, facing lower US tariffs, are already luring American buyers with cheaper alternatives.
About 30% of India’s exports to the US — pharmaceuticals, electronics, raw drug materials and refined fuels — worth $27.6 billion, remain duty-free. But sectors such as textiles, gems and jewellery, and seafood, which rely heavily on the American market, face declining orders. “At a 50% tariff, it is very difficult to export,” Sengupta said.
The impact is already visible. The Federation of Indian Export Organisations (FIEO) reported that textile and apparel manufacturers in Tirupur, Delhi and Surat had halted production due to worsening cost competitiveness. “Indian goods have been rendered uncompetitive compared to competitors from China, Vietnam, Cambodia, the Philippines, and other southeast and south Asian countries,” said FIEO president SC Ralhan.
Indian shares tumbled ahead of the tariffs, with the benchmark BSE Sensex falling 1%, or 849 points, to 80,876 in Mumbai on Tuesday. The US, India’s largest export market, accounts for nearly a third of shipments in key sectors such as gems, jewellery and textiles, highlighting the potential economic damage.
Even if the tariff dispute is resolved, trust in future relations with Washington may be the biggest casualty. “Trump has blown it. The hard work between the two countries, which inherently did not trust each other but still managed to build a solid strategic relationship, is now at risk,” said a senior Indian trade official, speaking anonymously. “It is going to take a long time to reboot, and it probably won’t happen until Trump is out. At a working level, the countries must cooperate, but politically, neither can afford to appear weak,” the official added.
S. Jaishankar, India’s external affairs minister, called Washington’s demand that New Delhi stop buying Russian crude “unjustified and unreasonable,” accusing the West of hypocrisy and noting that Europe trades far more with Russia. To avoid the extra US tariff, India would need to replace about 42% of its oil imports.
While Trump has accused India of indirectly funding Russia’s war through its crude purchases, he has not taken similar measures against China, another major buyer. He has also tried to ease tensions with Moscow, inviting Vladimir Putin to Alaska for a summit earlier this month and even floating a trilateral meeting with Volodymyr Zelenskyy as part of efforts to end the war.
Despite tensions, Jaishankar said US-India trade talks continue. “We are two big countries, we need to have conversations … the lines are not cut,” he said.
Earlier hopes for a trade deal capping tariffs at 15% were dashed after India refused to open its agricultural market to US farm goods, fearing harm to poor farmers.
India has pivoted toward Russia, which it calls an “all-weather friend.” Jaishankar recently travelled to Moscow to meet Putin, who is expected to visit New Delhi later this year. Modi will also make his first trip to China in seven years to attend the Shanghai Cooperation Organisation summit, aiming to stabilise relations after a deadly 2020 Himalayan clash froze ties.