Trump imposed 50% tariffs on Indian exports, which will take effect on August 27, arguing that buyers of Russian oil are financing the war in Ukraine. Commerce Secretary Howard Lutnick believes these measures could bring in $50 billion a month. Experts call this Trump's boldest economic weapon.
As noted by The Economist, India imports about 2 million barrels of Russian oil a day - roughly 35-40% of the total oil supply. Refiners buy it cheaply, turn it into fuel, and export it.
The country was a key US partner in the 'Quad' alliance against China. Now Prime Minister Narendra Modi is in a difficult position, as reducing Russian oil supplies will anger voters, while refusing Trump's demands threatens an export collapse.
Meanwhile, India has already reduced orders for Russian oil by 40-50%, one trader told the publication. If Trump pushes harder, global oil could jump to $80 a barrel, warns The Economist.
The 50% tariff doubles existing rates and hits sectors such as textiles, auto parts, seafood, and jewelry, whose export volume to the US last year amounted to $86 billion. India could lose 40-50% of its exports to the US - a serious blow to Modi's economy, writes the Washington Post. Additionally, the average import tax rate for American consumers under the new tariffs is 18.6%, the highest since 1933. In modern US history, the average tariff rate has fluctuated between 2 and 3 percent.
Indian Foreign Ministry spokesman Randhir Jaiswal called the imposed tariffs unfair, unjustified, and unreasonable, noting that other countries also buy Russian oil.
Trump's trade war destabilizes the US strategy in Asia and pushes India closer to Russia and China, according to The New York Times.
Photo: Washington Post