Trump's 50% tariff on India kicks in

Donald Trump's steep 50% tariffs on India have come into effect, only weeks after his executive order that added a 25% penalty linked to India’s purchases of Russian oil and weapons.

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This move makes India, one of Washington’s key Indo-Pacific partners, one of the most heavily targeted countries in the world. The impact could weigh heavily on exports and growth in the world’s fifth-largest economy, especially since the US was recently India’s largest trading partner.

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In response, the Indian government has shifted into crisis-management mode. Prime Minister Narendra Modi has promised tax cuts to cushion the blow and urged the nation to embrace self-reliance. During Independence Day celebrations at Delhi’s Red Fort, Modi, dressed in a saffron turban, spoke to thousands of citizens, calling on small shop owners to display “Swadeshi” or “Made in India” signs.

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“We should become self-reliant, not out of desperation, but out of pride,” he declared. “Economic selfishness is on the rise globally, and we must not sit and cry about our difficulties. We must rise above them and not allow others to hold us in their clutches.”

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These remarks, repeated in subsequent public appearances, appear aimed at countering the consequences of Trump’s harsh tariff policy. The measures threaten industries across India that export everything from textiles and jewelry to seafood for American consumers.

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While Modi’s “make in India, spend in India” call resonates, the challenge is steep. Manufacturing has long stagnated at around 15% of GDP despite subsidies and incentives. Experts say, however, that accelerating tax reforms could provide immediate relief. After already delivering a $12 billion income tax cut earlier this year, Modi is now considering an overhaul of India’s goods and services tax (GST), aiming for simplification and lower rates to ease pressure on households and businesses.

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