Trump's 50% tariff comes into effect, Indian exports worth ₹4.21 lakh crore hit
The US imposed the additional tariff on Indian goods as a punitive measure for New Delhi importing oil from Russia
The US imposed the additional tariff on Indian goods as a punitive measure for New Delhi importing oil from Russia
The US imposed the additional tariff on Indian goods as a punitive measure for New Delhi importing oil from Russia
The 50 per cent additional tariff on 55.5 per cent of Indian goods imposed by the Donald Trump administration came into effect on Wednesday, August 27.
The additional tariff, a bid to punish India for purchasing Russian oil, has worried the manufacturing sector. The US notified the imposition on Tuesday.
The tariff added to the 25 per cent imposed earlier on Indian goods on August 7. The doubling of tariffs has made India one of the nations facing the highest US tariffs.
The Prime Minister's Office convened a meeting to assess the impact of the doubled US tariff and discuss means to overcome the burden. Senior officials from the ministries of External Affairs, Finance, and Commerce attended the meeting.
The US imposed the additional tariff on Indian goods as a punitive measure for New Delhi importing oil from Russia, locked in a war with Ukraine. However, the US had not imposed double tariffs on China, and the European Union, which purchases huge quantities of Russian oil.
Trade talks between the US and India, the world's two largest democracies, also derailed after New Delhi rejected Washington's demand to open up the country's agriculture and dairy sectors. A US delegation, which was scheduled to arrive in India on Monday, August 25, has postponed the visit.
Following the US's issuance of a notice to impose double tariffs on Tuesday, fears were reflected in the Indian market. The Sensex dropped 849 points and the Nifty went down by 255 points.
At a glance
The US has imposed a 30 per cent tariff on Chinese goods and 20 per cent on Vietnamese goods. As a result, China and Vietnam can sell their goods at a lower price than India in the US market. This could affect the sales of Indian goods. Consequently, this will lead to a loss of revenue and jobs in India, posing a threat to all sectors of the Indian economy, at least indirectly.
Indian exports, valued at USD 8,650 crore, may dip by 43 per cent to USD 4,960 crore during the current financial year.
India's GDP growth of 6.5 per cent may decrease to 5.6 per cent.
Massive hit
The 50 per cent double tariff will affect Indian exports worth ₹4.21 lakh crore (USD 4,820). This is in addition to the existing tariffs.
Affected sectors
The doubled tariffs will affect the following sectors: Textiles, footwear and other leather products, home decor, chemicals, plastics, machinery, spices, tea, coffee and prawns.
Exempted from 50 per cent tariff: Electronic goods, medicines and petroleum products.