Donald Trump announced the introduction of a 25 percent tariff on Indian goods, as well as additional import levies in connection with India's purchase of energy resources from Russia.
The US president said on Wednesday that India remains an “ally” but called its taxes on US products “excessive”.
He also mentioned that India was purchasing military equipment and oil from Russia, which he said contributed to the outbreak of hostilities in Ukraine.
As a result, a revised tariff system for a number of countries will be in effect from Friday, including additional financial penalties.
Indian authorities have confirmed that they are analysing the possible consequences of this decision.
New Delhi and Washington have been discussing the terms of a “fair, balanced and mutually beneficial” agreement in recent months, and India remains committed to the talks, the trade ministry said.
The new levies could make India less competitive in the US market compared to Vietnam, Bangladesh and possibly China, said Ajay Sahai, head of the Federation of Indian Export Organisations.
“The situation is again uncertain, as Trump has not specified what sanctions will be added to the tariffs,” he said. “This will inevitably affect demand for Indian products.”
The announcement came after a series of trade deals with the EU, Japan, the Philippines and Indonesia that Trump said would expand access for American goods to international markets and allow for higher import taxes in the US.
The head of state expects that revenues from the new fees will help compensate for the budget deficit caused by the reduction in income tax and stimulate employment in local industries.
While the tariffs have helped reshape trade terms, the economic outlook remains unclear, with experts expecting a slowdown in the U.S. economy and rising inflation due to a shift in tax burdens between businesses and consumers.
Washington's approach, which includes 15 percent tariffs on long-standing EU partners, has also drawn criticism, prompting European countries, Canada and others to seek alternatives to U.S. influence in the global economy.
The United States has long sought to deepen cooperation with India. Prime Minister Narendra Modi has built a strong working relationship with Trump, and the two leaders continue to develop state-to-state ties.
With a population of over 1.4 billion, India is the world's largest country and a potential geopolitical balancer against China.
New Delhi has traditionally maintained close ties with Moscow and has not joined Western sanctions against Russia over the situation in Ukraine.
During his February meeting with Modi, Trump said India would begin purchasing American energy resources – oil and gas.
Returning from a five-day visit to Scotland, he discussed trade policy and tariffs with reporters.
He then avoided commenting on reports of impending tariff measures against India, saying: “We'll see.”
In addition, Trump noted that the details of the trade agreement with India have not yet been finalized.
Sourse: breakingnews.ie
