US President Donald J Trump has once again shocked the world by imposing another 25% tariffs on India over and above the existing 25% tariff proposed recently. The additional tariff would be implemented in a 21 days time giving India very little time to negotiate. Trump also hinted that some more countries are on his tariff hike list in which one of them could be China. Trump said that he is not singling out India for buying Russian oil. It is worth mentioning that China is the biggest importer of Russian oil.
These additional tariffs could hurt Indian exporters as similar products from countries like Bangladesh, Vietnam, Thailand, Pakistan, Philippines and Indonesia could compete with them. The additional 50% tariff on Indian products would deeply affect the choice of buyers in United States as to whether to buy these products from India at such high costs.
India’s major export products to USA include pharmaceuticals, precious stones, jewellery, electronic items, petroleum products, textiles, automobile and its parts, chemicals, agricultural produce etc. The short-term impact of this tariff could be devastating for Indian exporters as they would see a sudden drop in the demand for their goods.
India has two options now. Either India can accept the main demand of USA which is stop buying Russian oil or maintain the status quo and face financial repercussions in Indian economy. The short-term impact of the later option would be huge. However, this is also an opportunity for India to diversify their export portfolio and end the reliance on USA
