On Wednesday, President Trump announced that the US administration had decided to impose a 25 percent tariff on imported goods and products from India. The tariffs will take effect on Friday. In addition, India may face further penalties for engaging in trade with Russia, including the purchase of Russian oil.
Trump said India is a friend to the United States, whose "tariffs are far too high, among the highest in the world." He also criticized India"s weapons and oil deals with Russia, "when everyone wants Russia to STOP THE KILLING IN UKRAINE."
India currently applies a 39 percent tariff on imported agricultural products and a 45 percent tax on vegetable oils. In response to the US"s new tariffs, the Indian government said it"s examining the implications of Trump"s announcement while continuing the negotiations with Washington for a "fair, balanced and mutually beneficial bilateral trade agreement."
The 25 percent tariff places India among the countries subject to the highest import duties when exporting to the US market. By comparison, imports from the European Union face a tariff of just 15 percent.
After officially taking office, President Trump moved to further escalate the trade war with China by raising tariffs to their highest levels. As the world"s leading manufacturer of smartphones for major brands such as Apple, Google, and Samsung, China"s increased tariff burden was expected to drive up smartphone prices in the US market.
The increase in tariffs on China has prompted an increasing number of tech companies to shift their manufacturing focus to India. For example, most iPhones sold in the US are now Indian-made, while the latest data by Canalys shows around 44 percent of all smartphones imported to the US are also made in India.
While smartphone manufacturers initially hoped that shifting production to India would protect them from tariffs, the recent imposition of a 25 percent tariff has complicated the situation significantly.
In April, the US government imposed a 27 percent tariff on imports from India, but later backed away from the plan. Now, however, it seems that the two sides have failed to find common ground in their trade negotiations.