Trump hikes levy on Indian imports to 50%
On Wednesday, August 6, 2025, U.S. President Donald Trump signed an executive order imposing an additional 25% tariff on Indian imports. This move was in response to India’s continued oil trade with Russia, despite U.S. sanctions related to the Russia-Ukraine conflict. This is over and above the initial 25% tariff announced on July 31, which comes into effect on Thursday, while the additional 25% will be enforced after 21 days.
📜 Key Provisions of the Executive Order:
-
Cites Executive Order 14066 on the national emergency due to Russia’s actions in Ukraine.
-
Imposes an additional ad valorem duty of 25% on imports from India.
-
Justifies it as a penalty for India’s direct or indirect purchase of Russian oil.
🇮🇳 India’s Response:
-
The Ministry of External Affairs (MEA) stated that the tariffs are unfair, unjustified, and unreasonable.
-
Clarified that:
-
India’s imports are market-based.
-
India’s energy security (for 1.4 billion people) is the priority.
-
Several Western nations (including the U.S. and EU) also continue to trade with Russia.
-
-
Asserted that India will take all necessary actions to protect its national interests.
💼 Trade Implications:
-
S.C. Ralhan (President, FIEO):
-
About 55% of Indian exports to the U.S. will be affected.
-
Exporters will face a 30–35% competitive disadvantage compared to others with lower or no tariff barriers.
-
🤝 Diplomatic & Strategic Concerns:
-
Negotiations are ongoing for a Bilateral Trade Agreement (BTA).
-
Next round of physical meetings between India and U.S. officials scheduled for August 25 in New Delhi.
-
Ajay Srivastava (GTRI) advised:
-
No retaliation for at least 6 months.
-
Trade talks must proceed free from coercion.
-
India should stop Russian oil imports only if economically viable — not under pressure.
-
🔍 Strategic Significance:
-
Highlights geoeconomic pressures and energy security dilemma.
-
Reflects on the changing nature of Indo-U.S. relations.
-
Demonstrates how external geopolitical pressures impact domestic economic decisions.
-
Raises questions of sovereignty, reciprocity in trade, and principled foreign policy.
📚 Related PYQs (Previous Year Questions)
🔵 UPSC Prelims (Objective)
1. (2023)
Q. With reference to India’s foreign trade, consider the following statements:
-
India is a member of GATT and WTO.
-
India has signed bilateral trade agreements with many countries.
-
India imposes retaliatory tariffs under the WTO dispute settlement framework.
Which of the above are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1, 2 and 3 ✅
D. 1 and 3 only
2. (2022)
Q. Consider the following statements regarding tariffs:
-
Tariffs are a form of non-tariff barrier.
-
Tariffs may be imposed as a retaliatory measure.
-
Tariff hikes always result in decreased trade volume.
Which of the statements are correct?
A. 1 and 2 only ✅
B. 2 and 3 only
C. 1 and 3 only
D. All of the above
3. (2021)
Q. “Most Favoured Nation” (MFN) clause under WTO implies:
A. Equal treatment to all trading partners ✅
B. Preference to neighbouring countries
C. Only for allies under defense pacts
D. Exemption from tariffs
🟠 UPSC Mains (Descriptive)
1. (2023 - GS II)
Q. Discuss the challenges and opportunities in Indo-U.S. trade relations in the context of recent protectionist measures.
✅ Link: Use the 2025 tariff issue as a fresh example of protectionism and its impact on India's trade negotiations.
2. (2022 - GS III)
Q. Examine the role of the World Trade Organization (WTO) in resolving disputes arising out of unilateral tariff measures.
✅ Link: Mention how India could take the U.S. to WTO dispute panel for the imposed tariffs.
3. (2021 - GS II)
Q. "India's foreign policy must balance its strategic autonomy with international pressure." Discuss with reference to India's energy imports.
✅ Link: Use India-Russia oil trade amid U.S. pressure as a strong illustration.
🧠 Analysis for UPSC:
| Area | Implication |
|---|---|
| International Relations | Strain in India-U.S. strategic ties |
| Trade & Economy | Major threat to exports and domestic industries |
| Energy Security | Highlights India’s dependence on affordable oil imports |
| Geopolitics | Pressure from Western powers amid Ukraine crisis |
| Ethical Governance | Balancing national interest with international commitments |
| WTO Relevance | Revival of discussions around tariff justifications |
No comments:
Post a Comment