Trump's first tranche of 25% tariffs on Indian imports take effect

The United States has imposed sweeping new tariffs on several countries, with India facing among the steepest hikes. A 25 per cent tariff on Indian imports came into effect on Thursday, following a directive signed by US President Donald Trump last week.

In a fresh blow, Trump announced an additional 25 per cent duty on India for buying Russian oil, bringing the total tariff burden on Indian goods to 50 per cent.

The second round of tariffs will come into force on August 27, 21 days from the latest announcement.

The executive order titled 'Further Modifying the Reciprocal Tariff Rates' lists new tariff rates on exports from nearly 70 nations. The new duties range from 10 per cent to 40 per cent, with countries like Laos and Myanmar facing 40 per cent, Pakistan 19 per cent, Sri Lanka 20 per cent, the UK 10 per cent, and Japan 15 per cent.

Most of these tariffs came into effect just after midnight in New York on August 7. “It’s Midnight!!! Billions of Dollars In Tariffs Are Now Flowing Into The United States Of America [sic]!” Trump posted on his social media platform, Truth Social.

In another post, he said, “Reciprocal tariffs take effect at midnight tonight! Billions of dollars, largely from countries that have taken advantage of the United States for many years, laughing all the way, will start flowing into the USA. The only thing that can stop America’s greatness would be a radical left court that wants to see our country fail!”

US slaps additional 25% tariff on India over Russian oil trade

On Wednesday, Trump signed an executive order imposing an additional 25 per cent tariff on goods imported from India, citing New Delhi’s ongoing oil trade with Russia. The White House said that India’s “direct or indirect” imports of Russian crude violate sanctions and threaten US foreign policy, particularly efforts to isolate Moscow amid its war in Ukraine.

“The Government of India is currently directly or indirectly importing Russian Federation oil,” the order stated.

This new tariff, which takes effect August 27, raises the overall duty on most Indian goods to 50 per cent, tying India with Brazil for the highest rate among US trading partners. The measure, enacted under the International Emergency Economic Powers Act, reinforces the national emergency declared in 2022 concerning Russia. Trump described the action as “necessary and appropriate” to address the continuing threat posed by Russia and maintain existing emergency measures.

While shipments already in transit or cleared before September 17 are exempt, the 25 per cent duty will otherwise apply broadly, in addition to existing levies. The US defined “indirect” imports as purchases made via intermediaries or countries where the oil’s origin can be traced to Russia.

India strongly condemned the decision, calling it “unfair, unjustified and unreasonable”. The Ministry of External Affairs said its energy imports serve national security needs and highlighted that European nations continue to trade with Russia at far higher levels.

Pressure mounts on global trade partners

The tariffs come after months of tense negotiations with several US allies and trade partners. The European Union, Japan, and South Korea accepted a 15 per cent duty on key exports such as automobiles to avoid the higher 25 per cent rate. Others, like Switzerland and India, failed to secure exemptions.

Trump defended his policy by saying some countries have shown willingness to align with US trade and national security interests, while others have not. “There are also some trading partners that have failed to engage in negotiations with the United States or to take adequate steps to align sufficiently with the United States on economic and national security matters,” the executive order said.

Economists warn the impact of these tariffs could soon be felt across the US economy. According to Bloomberg Economics, the average US tariff rate has now jumped to 15.2 per cent, compared to 2.3 per cent last year — the highest since World War II.

Recent data has already shown signs of stress -- US job growth slowed significantly in July, and economic growth dipped in the first half of the year as businesses adjusted to shifting trade conditions, Bloomberg reported. While unemployment is still low and prices have not gone up a lot yet, experts think it will not be long before people start to feel the pressure.