Trump’s 50% tariffs on India take effect as deadline passes with no trade deal

Investing.com-- U.S. President Donald Trump’s doubled 50% trade tariffs on India took effect from Wednesday as the deadline for the levies passed with no trade deal reached between Washington and New Delhi.

U.S. Customs and Border Protection issued a notice on Tuesday outlining Trump’s increased tariffs on a host of goods. But select items like steel, copper, aluminum, pharmaceuticals, automobiles, and electronics will be exempt. 

Trump had earlier this month outlined 25% tariffs on Indian exports to the United States, and had said the levy would double to 50% in three weeks. The increased tariffs were tied to Washington’s ire over India’s continued purchases of Russian oil.

Trump’s doubled tariffs then took effect from midnight on Wednesday. The president has also called on India to further open its agricultural market to U.S. imports– a sensitive topic for the ruling BJP party, which has largely sought to protect its agrarian voting base.

India, along with Brazil, now faces the among highest tariff levels imposed by the United States. 

Indian ministers argued that the tariffs were unjustly imposed, pointing to China’s continued buying of Russian oil, for which the country faces no U.S. tariffs. Prime Minister Narendra Modi has also signaled no intent to curb buying of Russian oil, recently stating that the country will overcome despite the 50% tariffs. 

New Delhi was Russia’s second-largest buyer of oil after Saudi Arabia, shipping data for July showed. India is highly dependent on oil imports, which represent roughly 80% of the country’s crude consumption. 

India has assured local exporters that the government will take all measures to safeguard them from the increased tariffs, while also pushing for exports to alternative markets such as Europe and China. 

Earlier in August, New Delhi also outlined potential tax cuts for several Indian sectors to help curb the impact of Trump’s tariffs.

But analysts expect increased headwinds for the Indian economy from Trump’s tariffs. ANZ analysts said in a recent note that Trump’s tariffs will pressure India’s most competitive export sectors, while also quashing capital expenditure in the industrial sector. They also flagged a cautious outlook for Indian stocks.

Indian markets were closed for a holiday on Wednesday. The Nifty 50 index had fallen 1% on Tuesday. 

The Indian rupee remained close to record lows hit after Trump’s initial announcement of the 50% tariffs.