US President Donald Trump has imposed an additional 25 per cent tariff on Indian goods in response to India’s continued purchases of Russian energy. The move escalates tensions with a key Asian partner just before broader duties are set to take effect. Trump signed an executive order enacting the new rate, adding to a previous 25 per cent levy on Indian imports announced last week. The increased duty will be implemented within 21 days, as outlined in the order.
The iShares MSCI India ETF experienced a decline following Trump’s announcement, reaching session lows. Simultaneously, oil prices saw a jump, while the Indian rupee remained steady at 87.91 per dollar in the offshore market. These measures follow unsuccessful talks between Washington and Moscow regarding the war in Ukraine. Indian Prime Minister Narendra Modi has defended his nation’s consumption of Russian oil as essential for supporting its economy, arguing that India is being unfairly targeted by the US. However, this justification has not satisfied Trump.
Trump stated in an interview with CNBC that India is “fuelling the war machine” and that he is “not going to be happy” if they continue to do so. In response, a spokesperson for India’s Ministry of External Affairs described Trump’s announcement as “unfair, unjustified and unreasonable.” The spokesperson affirmed the government’s commitment to taking all necessary actions to protect India’s national interests.
Starting Thursday, levies on imports from numerous US trading partners, including India, will increase. These tariffs form the core of Trump’s strategy to reduce trade deficits, revitalise domestic manufacturing, and generate revenue for the federal government. However, they also pose risks to the global economy, potentially leading to higher costs and disrupted supply chains.
