India Suggests Eliminating Import Duties on U.S. Exported Items Entirely

In a move that could potentially have far-reaching implications for both economies, US President Donald Trump has increased tariffs on Indian goods sold in the United States. The tariffs, which were previously at 25%, have now been raised to 50%, sparking concerns and criticism from both Indian officials and industry experts.

The high tariffs are affecting labor-intensive sectors such as textiles, jewellery, gems, footwear, leather, and other products. Forecasts suggest that the export of Indian goods to the US might reduce to about $50 billion in 2026 from the observed $87 billion in 2024, a significant drop that could impact India's GDP by 1%. Many jobs could be lost as a result of the tariffs imposed on Indian goods.

The Indian government, led by Prime Minister Narendra Modi, has expressed concern about the impact of these tariffs on its farmers. There are concerns that an influx of US produce could potentially harm India's agricultural sector. PM Modi has not responded to these statements due to his visit to Japan and China.

The US government, led by Treasury Secretary Scott Bessent, has given a reason for the imposition of these heavy duties: India has been slow in discussing trade deal talks. However, Prime Minister Modi and the Indian government have criticized the logic the US uses to support tariff decisions. Trump stated that India's proposal to cut tariffs on US goods to zero is insufficient, implying a criticism of India's current trade policies.

The situation is further complicated by accusations made by some US officials regarding India's oil buying practices. Some US officials have been supporting Trump's decisions and have condemned India for buying oil, specifically accusing "Brahmin" oil refiners of "profiteering" by reselling Russian oil. No response has been given by PM Modi to these statements.

Bessent also cited India's oil purchase policy from Russia as a trigger for the heavy duties imposed. Trump has blamed the India-US trade deal as a "one-sided disaster," and has stated that India should have reduced tariffs years ago. The tariffs imposed by Trump's government are one reason for his apparent anger with India.

Despite these challenges, it is hoped that both nations can find a way to resolve their trade disputes amicably. The potential impact on both economies and the livelihoods of millions of people underscores the importance of finding a solution that benefits all parties involved.