Denting the rift in relations with New Delhi, it imposed on the markets, causing yet another blow to the world’s fastest growing economy.
The 25% additional duty came into force at 12:01 am East America on Wednesday, increasing tariffs on many Indian exports to 50% and placing the US President Donald Trump.
The announcement this month that the United States will double its duties in India marked a sudden escalation of tension, after the two sides’ failure to achieve remarkable progress in commercial talks. The negotiators had initially aimed at the first stage of a trade agreement until the beginning of summer.
Presses Moscow through New Delhi
Alyssa Ayres, a former State Department official, who is now at George Washington University, told the Financial Times that the deterioration of US-India relationships is confusing.
Indian analysts reported Trump’s move was partly aimed at putting pressure on Russian President Vladimir Putin to end his war in Ukraine. India continued to buy Russian crude oil, though at lower levels, despite the threat of higher duties.
“Trump is trying to influence Putin and India is an easy goal to do so,” explained Asok Malik, president of the ASIA Group India and former foreign ministry policy adviser.
Dip in Indian exports
The World Trade Research Initiative, a New Delhi -based thought tank, predicted that Indian exports to the US, its largest trade partner, could be reduced from $ 86.5 billion this year to about $ 50 billion.
He said that fabrics, gemstones, jewelry, shrimp and carpets would be more affected, with areas preparing 70% export collapse, “at risk hundreds of thousands of jobs”.
Standard Chartered has predicted that duties could reduce up to 1 percentage point the GDP increase in India, although Anubhuti Sahay, head of the bank’s economic research in India, noted that its domestic focused economy was less exposed to Asian countries.
Semiconductors, electronic consumer supplies and medicinal products will be covered by separate, special duties specialists. However, the overall rate ranks India among countries most affected by Trump’s tariff war, at the same level as Brazil and higher than China, which is on a separate negotiating course.
“I think India could survive 25% … but 50% is a completely different scenario,” said Mark Linskot, a former American trade trading, who is now advising US and Indian businesses.
The deadlock in the conversations
The talks had partially swam, due to India’s resistance to the opening of the huge agricultural and dairy sectors of the country, for which Prime Minister Narendra Monty has vowed to “never compromise”. US trade negotiators canceled a scheduled trip to New Delhi this week.
Meanwhile, Indian government officials are making steps progressing to Russia and China, with Monty being going to make his first visit to the last country after seven years this weekend. Foreign Minister Subramaniam Jaisankar last week encouraged Russian companies to work “more intensively” with India.
Some Indian officials believe that the impasse partly reflects the coldness of personal ties between Monty and Trump, who has threatened Apple to transport part of production to India, has ridiculed the country’s “dead economy” and has flirted with its biggest opponent.
According to sources citing the FT, Monty did not contact Trump, in preparation for the deadline for imposing duties in the US, as he was skeptical of the president’s attempt to bring concessions outside the negotiating framework. Monty’s office did not respond to a request for annotation.
Linskot also pointed out the collapse of Trump-Modi communication. “The missing was the conversation between leaders and the opportunity for the president to seal the deal, to put the stamp of his approval,” he said.
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