Calling Us a Friend, Yet a Heavy Blow from Trump

U.S. President Donald Trump has acted in a way that can only be described as a hard slap, despite calling India a friend. As previously hinted, he has now imposed heavy tariffs on Indian goods. A 25% import duty has been levied on goods imported from India, and these new tariffs are set to come into effect within a few hours.

Although India is considered a friendly nation, Trump had already stated that trade is limited due to high tariffs from India. Now, he's made good on his word and imposed the 25% import duty, placing a significant burden on India. These increased tariffs will be effective from August 1.

India has been in discussions with the U.S. over these tariffs for the past 45 days. A few days ago, India even issued a statement saying that talks were progressing positively. Yet, Trump’s sudden announcement has come as a shock — and he hasn’t stopped there. He also made serious allegations.

Trump claimed that India is purchasing military goods and crude oil in large quantities from Russia, which is currently at war with Ukraine. Citing this as a reason, he openly announced the 25% tariff hike in protest of India's stance.

He recently alleged that India imposes tariffs like no other country in the world. “So, we will respond in the same way,” Trump declared — and followed through.

Due to this tariff increase, prices of Indian seafood, agricultural products, garments, and automobile parts are expected to rise sharply in the U.S. As prices go up, purchases will likely drop, leading to reduced imports — a blow to Indian companies. Small and medium-scale industries are likely to be the most affected. Most notably, this move may severely impact India's pharmaceutical sector.

The U.S. is India's largest trading partner, receiving around 18% of Indian exports. With these new tariffs, India's GDP growth could take a hit of up to 30 basis points. The rupee may also depreciate further as a result.

However, this situation may offer India some advantages as well. The U.S. has already imposed heavy tariffs on China, which means demand for Indian products may not decline significantly. Furthermore, since there is now clarity on the U.S. tariff structure, more Chinese companies might consider shifting operations to India.