Donald Trump slaps 50% tariffs on US partner after Russian oil threat ignored

Donald Trump has slapped 50% tariffs on Indian goods due to the country still buying Russian oil. The move threatens more than half of India's exports to its largest market. New Delhi estimates the tariffs taking effect today (Wednesday, August 27) will impact £35.8billion ($48.2bn) worth of exports.

The US President initially announced a 25% tariff on Indian goods, but earlier this month he signed an executive order for an extra 25% tariff due to India's purchases of Russian oil. That brings the combined tariffs imposed by the United States on its ally to 50%.

Officials in India have warned the new duties could make shipments to the US commercially unviable, triggering job losses and slowing economic growth.

Trade relations between the US and India have expanded in recent years, but remain vulnerable to disputes over market access and domestic political pressures.

India is one of the fastest-growing major global economies and it may face a slowdown as a result.

Estimates by New Delhi-based think tank, Global Trade Research Initiative, suggest labour-intensive sectors such as textiles, gems, jewellery, leather goods, food and automobiles will be hit hardest.

Ajay Srivastava, the think tank's founder and a former Indian trade official, said the new tariff regime is a strategic shock.

He said it threatens to wipe out India's long-established presence in the US, causing unemployment in export-driven hubs and weakening its role in the industrial value chain.

There is some relief for India, however, as the US has, for now, exempted sectors such as pharmaceuticals and electronic goods from additional tariffs.

Puran Dawar, a leather footwear exporter in India, said the industry would take a substantial hit in the near term unless domestic demand strengthens and other overseas markets buy more Indian goods.

Dawar, whose clients include Zara, said: "This is an absolute shock."

Groups representing exporters warn the new tariffs could hurt India's small and medium enterprises which are heavily reliant on the US market.

Ajay Sahai, director general of the Federation of Indian Export Organisations, said: "It's a tricky situation. Some product lines will simply become unviable overnight."

India and the US have held five rounds of negotiations for a bilateral trade agreement, but have yet to reach a deal.

That is largely because New Delhi has resisted opening its agriculture and dairy sectors to cheaper US imports.

India has concerns that doing so would endanger the jobs of millions of Indians who rely on them for their livelihoods.

Prime Minister Narendra Modi has vowed not to yield to the pressure. He told a rally in his home state of Gujarat earlier this week: "For me, the interests of farmers, small businesses and dairy are topmost."

Mr Modi said the world was witnessing a "politics of economic selfishness".