Trump doubles the punishment on India and imposes 50% tariffs.
The new tax is Washington's retaliation against Narendra Modi for his purchases of Russian oil.
BarcelonaSince Wednesday, India has been the country most affected by the trade war launched by US President Donald Trump. While Indian exports previously faced 25% tariffs, the US administration has doubled this rate to 50% in retaliation for the Asian country's purchases of Russian oil. Only Brazil has such high tariffs, a measure that also seeks to penalize the country presided over by Lula da Silva in his case for the trial of former President Jair Bolsonaro, a political ally of Trump.
Just two days ago, the negotiation in extremis The meeting between delegations of senior officials from both countries ended without an agreement, as India decided to stand firm on its energy decisions, arguing that they were necessary to guarantee supplies to what is the most populous country in the world. Thus, once the 30-day deadline stipulated by the White House had expired, the 50% tariffs went into effect, double the 25% initially announced by Trump.
Impact of €60 billion
The affected exports have an estimated value of €60 billion and include clothing and footwear, furniture, chemical products, precious stones and jewelry, among others. Excluded are shipments in traffic, humanitarian aid, and items included in reciprocal trade programs. "We are taking appropriate measures to ensure that this does not harm our economy, and I assure you that the strength of our economy will allow us to overcome these times," India's Deputy Minister of Foreign Affairs, Kirti Vardhan Singh, told reporters, according to Reuters. For now, according to several Indian media outlets, the country is planning to diversify its exports into up to 40 key textile markets, such as the United Kingdom, Japan, South Korea, Germany, and Canada.
The market response to the new phase of the trade war that begins this Wednesday will take time. Indian stock exchanges, such as the National Stock Exchange and Bombay Stock Exchange, are closed for a national holiday. Meanwhile, the Indian rupee is down slightly by 0.14% against the US dollar today.
Indian President Narendra Modi's position is related to the conflict in Ukraine because he began buying Russian crude oil in 2022, after Russia invaded Ukrainian territory, taking advantage of the fact that Western sanctions had lowered its price, something that has helped the Kremlin continue financing the war. In this regard, Trump went so far as to accuse the Indian authorities of "not caring how many people are killed in Ukraine by the Russian war machine." New Delhi argues that if it stopped imports of Russian oil, about 2 million barrels a day, it would disrupt its entire value chain, which would raise fuel prices. However, this Wednesday, US Treasury Secretary Scott Bessent said in an interview with Fox Business that the relationship between the world's largest democracy and the planet's largest economy is "very complicated," but that Trump and Modi have very good relations. "And it's not just about Russian oil," he added.
This Washington strategy is the same one it applied to Brazil. For the most populous country in South America, Trump announced in July an additional 40% quota on top of the 10% tariffs it already had. With thistariffBrazil became the country most affected in the world by the trade war. The White House asserted that its government's "recent policies, practices, and actions" "constitute an unusual and extraordinary threat to the national security [...] of the United States." In fact, this Tuesday, Brazilian Foreign Minister Mauro Vieira called on business leaders in Brazil and the United States to "raise awareness" in the Trump administration about the harm tariffs pose to both countries.
The other two powers with tariffs above the global average are China and Mexico, with 25% and 30% respectively, which could increase if these two countries do not reach an agreement with Washington before the end of the 90-day truces they agreed to.