Donald Trump Declares All-Out Trade War With 50% Tariff, Modi's India Will Not Budge

In a dramatic escalation of trade tensions, U.S. President Donald J. Trump has signed an executive order imposing an additional 25% tariff on imports from India. The move, announced today, is a direct response to India's continued purchase of Russian oil, which the administration claims is "directly or indirectly importing Russian Federation oil" and is therefore contributing to the "unusual and extraordinary threat to the national security and foreign policy of the United States."

The Executive Order, which takes effect 21 days from today, was issued under the authority of the International Emergency Economic Powers Act (IEEPA). The text of the order explicitly links the new tariffs to the national emergency declared in response to Russia's actions in Ukraine. It asserts that the measure is "necessary and appropriate" to deal with the ongoing threat and states that the tariffs will apply to "articles of India" imported into the United States.

This latest action builds on a series of increasing threats and previous tariffs levied by the Trump administration against India. While a previous 25% reciprocal tariff was announced, this new Executive Order formalizes a punitive measure specifically for India's energy trade with Russia, which has been a major point of contention. The order defines "Russian Federation oil" to include "crude oil or petroleum products extracted, refined, or exported from the Russian Federation, regardless of the nationality of the entity involved." It also specifies that "indirectly importing" through third countries or intermediaries is a basis for the tariff.

The imposition of these new tariffs is expected to have a significant impact on India's export-driven economy.

According to a recent analysis by the PHD Chamber of Commerce and Industry (PHDCCI), the existing 25% tariff could affect approximately $8.1 billion in Indian exports to the U.S., particularly in sectors like engineering goods, electronics, pharmaceuticals, and gems and jewelry. The new tariff, which is in addition to existing duties, is likely to further hit these sectors, making Indian goods less competitive in the American market.

The Indian government has, in the past, defended its energy strategy, stating that its purchase of Russian oil is driven by the need to secure affordable energy for its population and that it is fully compliant with international regulations. It has also criticized the "double standards" of the U.S. and European Union, which continue to engage in trade with Russia. With the new Executive Order, however, the U.S. has effectively bypassed diplomatic negotiations and opted for a more unilateral approach.

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