Donald Trump rattles markets again with new tariff levies
Trump’s executive order also set punitive rates for 69 trading partners, including 35% duties on Canada, 50% for Brazil, 20% for Taiwan and 39% for Switzerland
US President Donald Trump formally imposed a 25% tariff on Indian exports late on Thursday in a sweeping executive order that hit dozens of trading partners with new levies, escalating his global trade war as the Friday deadline approached.
The Republican pressed ahead with a trade policy that initially sparked market sell-offs when announced in April. On Friday, global shares stumbled, with Europe’s STOXX 600 down 1.8% and Wall Street opening sharply lower. Indian equity benchmark indices Sensex and Nifty fell 0.72% and 0.82% respectively.
Goods from India face the 25% levy plus an unspecified penalty for Russian oil purchases after talks bogged down over access to India’s agriculture and other sensitive sectors, with New Delhi refusing to open its labour-intensive farms to unfettered American imports.
Trump’s executive order also set punitive rates for 69 trading partners, including 35% duties on Canada, 50% for Brazil, 20% for Taiwan and 39% for Switzerland, as a previously announced 12.01am EDT August 1 deadline approached.
Goods from unlisted countries face a 10% baseline tax. The new levies come into effect on August 7.
{{/usCountry}}Goods from unlisted countries face a 10% baseline tax. The new levies come into effect on August 7.
{{/usCountry}}India now faces higher tariff rates than regional competitors, with Thailand, Indonesia and Malaysia set for 19% duties while Bangladesh, Vietnam and Taiwan face 20% rates—potentially weakening India’s position as a preferred sourcing destination for US companies.
{{/usCountry}}India now faces higher tariff rates than regional competitors, with Thailand, Indonesia and Malaysia set for 19% duties while Bangladesh, Vietnam and Taiwan face 20% rates—potentially weakening India’s position as a preferred sourcing destination for US companies.
{{/usCountry}}India exports $86.5 billion worth of goods to the US, with a surplus of $41 billion. However, industry experts estimate that a significant chunk of Indian goods may avoid the higher duties for now since the Trump administration has exempted electronics, pharmaceuticals, energy products and critical minerals from additional tariffs citing national interest.
{{/usCountry}}India exports $86.5 billion worth of goods to the US, with a surplus of $41 billion. However, industry experts estimate that a significant chunk of Indian goods may avoid the higher duties for now since the Trump administration has exempted electronics, pharmaceuticals, energy products and critical minerals from additional tariffs citing national interest.
{{/usCountry}}Nonetheless, analysts expect a significant impact for India’s exports. Ratings agency ICRA has lowered its growth forecast for India’s GDP from 6.2% to 6.0%, with further reductions possible if additional penalties are imposed. The Global Trade Research Institute estimates India’s goods exports could decline by 30% to $60.6 billion in FY26.
{{/usCountry}}Nonetheless, analysts expect a significant impact for India’s exports. Ratings agency ICRA has lowered its growth forecast for India’s GDP from 6.2% to 6.0%, with further reductions possible if additional penalties are imposed. The Global Trade Research Institute estimates India’s goods exports could decline by 30% to $60.6 billion in FY26.
{{/usCountry}}“The tariff announced for India is higher than other Asian countries such as Vietnam (20%), Indonesia (19%), and Japan (15%), which can potentially weaken India’s position as a preferred sourcing destination, particularly in sectors like textiles, cut and polished diamonds, tyres, metals, and auto components,” ICRA said in a report.
Questions loom over India’s purchases of discounted Russian energy, which have prompted threats of additional penalties as Washington seeks to restrict Moscow’s export revenues to push President Putin into Ukraine peace talks.
“Several options exist for India to diversify its crude purchases as Russian crude accounted for less than 2% of Indian crude imports prior to FY2023. However, the potential impact of cutting off Russian oil from the international market would be a significant increase in international oil prices as Russian oil exports account for 7% of global liquids consumption,” said Prashant Vashisht, senior vice president at ICRA.
“A significant spike in crude prices could lead to higher crude import bill and under recoveries on sale of liquified petroleum gas, petrol and diesel for the oil marketing companies. A $10/barrel increase in crude oil prices would increase the oil import bill by about $13-14 billion,” Vashisht added.
He warned that disrupting Russian energy exports could also make domestic gas and LNG imports more expensive for India.
India’s tariff rate could be reduced if New Delhi and Washington finalise a trade deal, which both countries have been negotiating since February. However, disagreements over market access—particularly in agriculture—as well as tariff reciprocity and ongoing WTO disputes have held up progress.
“A trade agreement will have a meaningful impact in accelerating our already-robust economic relationship. But an agreement would be more significant to further improve our larger strategic relationship. Not long ago, any type of trade agreement was seen as nearly-impossible, yet we are now on the verge,” said Rick Rossow, who holds the India chair at the Centre for Strategic and International Studies, a Washington DC-based think tank.
Basant Sanghera, managing principal at the Asia Group and former US diplomat, warned of missed opportunities. “It would be a missed opportunity if the trade deal doesn’t go through. The interim trade package on the table is substantial, especially by the standards of the US-India economic relationship, and it provides a foundation for future engagement.”
Sanghera argued there was a risk of problems worsening unless the leadership on both sides take on a more active role.
The tariff announcement also drew criticism from Capitol Hill, with Indian-American Congressman Ami Bera telling HT: “As negotiations between the United States and India continue, it is vital that we pursue outcomes that reflect the strength of our bilateral relationship and advance our shared strategic interests. India is a close friend and strategic partner. President Trump’s misguided and erratic statements do not reflect the bipartisan commitment to strengthening ties between our two nations.”
