India is preparing to face a strong blow to its foreign trade as the US imposes high tariffs on many export items from New Delhi, effective from today (August 27).

The latest tariff measure by US President Donald Trump against India is expected to threaten more than half of India’s export value to the US market.

50% – A Pressuring Figure

Initially, President Donald Trump announced a 25% tariff on Indian goods, but earlier this month he signed an additional order imposing another 25% tariff related to New Delhi’s purchase of oil from Russia. Thus, the total tariff rate the US has imposed on this ally has risen to 50%, the highest rate applied to an Asian country.

The Indian government estimates the new tariff affects $48.2 billion in exports. Officials warn that the impact on goods exported to the US could threaten the job market and slow economic growth.

According to the Global Trade Research Initiative (New Delhi), labor-intensive sectors such as textiles, gems and jewelry, leather goods, food, and automobiles will be the most severely affected.

The new tariff regime is a strategic shock, threatening to wipe out the long-standing presence of Indian goods in the US, causing unemployment and weakening the country’s role in the industrial value chain.

Some sectors, such as pharmaceuticals and electronics, have been granted temporary exemptions by the US, providing some relief for India due to its large exports in these industries.

In the city of Agra, the owner of a leather shoe business and the regional chairman of the Leather Export Council stated that the industry would be severely affected without domestic demand and alternative markets. He emphasized that the US would also suffer losses as consumers would have to buy more expensive goods.

Meanwhile, the Director General of the Federation of Indian Export Organizations warned that many products “will lose their trade viability overnight.”

India’s Ability to Adapt?

The tariffs take effect as Washington continues to pressure New Delhi to open its agricultural and dairy markets. After 5 rounds of negotiations, India and the US have still not reached a bilateral trade agreement. Prime Minister Narendra Modi declared no concessions: “The interests of farmers, small businesses, and the dairy sector are the top priority. My government will protect them.”

This week, a US delegation canceled its plans to come to New Delhi for a sixth round of negotiations.

In related developments, the Indian government is accelerating reforms to mitigate the impact, including adjusting goods and services taxes to reduce the cost of insurance, automobiles, and household appliances ahead of the Diwali festival in October; it is also discussing preferential credit support for export businesses and market expansion into Latin America, Africa, and Southeast Asia. Trade negotiations with the EU are expected to intensify.

Oil and Geopolitical Tensions

Oil prices fell sharply due to concerns about the impact of US tariffs on India related to its move to buy Russian oil. Specifically, Brent crude maintained a price of around $67 per barrel after falling more than 2%, while WTI crude traded above $63 per barrel.

India continues to import oil from Moscow at a rate of 1.4 – 1.6 million barrels per day from October, compared to an average of 1.8 million barrels per day in the first half of the year. There has been no directive from New Delhi requesting a halt to purchases of Russian oil, so refineries have no reason to voluntarily cut back.

Brent crude prices have fallen about 10% this year as the US-led trade war has raised demand concerns, while OPEC+ has eased supply restrictions. This has increased fears of a supply surplus, with the International Energy Agency (IEA) forecasting a potential record surplus next year. On August 26, President Donald Trump praised oil prices nearing $60 per barrel, while saying that crude oil prices would “fall further soon.”

Mr. Trump also warned of an “economic war” if a successful “bridge” for a peace agreement between Russia and Ukraine is not built. According to observers, the US imposing heavy tariffs on India, but not yet doing the same to China, which is also a major “oil customer” of Russia, suggests this is part of a broader strategy to pressure an end to the

India

India is a culturally rich and historically diverse nation in South Asia, known for its ancient civilizations, including the Indus Valley, and a long history of empires and kingdoms. It is home to numerous iconic cultural sites, such as the Taj Mahal and various historic temples, which reflect its deep spiritual heritage and architectural grandeur.

US

The United States is a federal republic founded in 1776 after declaring independence from Great Britain. Its history is marked by westward expansion, the Civil War, and its emergence as a global superpower in the 20th century. The nation is a vast and diverse cultural mosaic, shaped by immigration and known for its significant global influence in politics, economics, and popular culture.

New Delhi

New Delhi is the capital of India, officially inaugurated in 1931 to serve as the new administrative center of British India, replacing Calcutta. It was designed by British architects Edwin Lutyens and Herbert Baker and is known for its wide boulevards, government buildings like the Rashtrapati Bhavan, and historic monuments such as India Gate. Today, it stands as a bustling metropolis that is the political heart of the world’s largest democracy.

Russia

Russia is a vast transcontinental nation with a rich and complex history, spanning over a millennium from the establishment of the Kievan Rus’ state. Its culture has been profoundly shaped by Orthodox Christianity, the legacy of the Tsarist empire, and its transformation into the Soviet Union, leaving a legacy of iconic art, literature, and monumental architecture.

Agra

Agra is a historic city in northern India, best known as the home of the Taj Mahal, a 17th-century white marble mausoleum built by the Mughal emperor Shah Jahan. It served as the capital of the Mughal Empire under Akbar the Great, who also constructed the massive Agra Fort nearby. These monuments stand as a testament to the city’s immense historical and architectural significance.

Diwali

Diwali is a major religious and cultural festival in Hinduism, Sikhism, and Jainism, primarily celebrated in India and by the diaspora worldwide. Its history is rooted in ancient legends, most commonly the story of Lord Rama’s return to his kingdom after 14 years of exile. The festival is known as the “Festival of Lights,” symbolized by the lighting of oil lamps (diyas), fireworks, family gatherings, and prayers for prosperity.

EU

The European Union (EU) is a political and economic union of 27 member states, primarily located in Europe. It was formally established in 1993 by the Maastricht Treaty, building upon earlier post-World War II cooperation to promote peace and economic integration. Today, it operates through a system of supranational institutions and intergovernmental decisions, creating a single internal market and a common currency used by 20 of its members.

OPEC+

OPEC+ is an informal alliance of oil-exporting nations, first established in 2016, that coordinates policies to stabilize the global oil market. It is an expansion of the original Organization of the Petroleum Exporting Countries (OPEC), which was founded in 1960, and includes other major producers like Russia. The group’s primary function is to agree on production levels to manage oil supply and influence prices.