Trump penalises 70 nations; 25% levy on India from Aug 7

The 25 per cent tariffs announced on Indian imports on July 30 will come into effect from August 7, a White House statement said after US President Donald Trump signed an executive order on the new duty regime as the August 1 deadline for trade negotiations ended.

In the executive order titled ‘Further Modifying The Reciprocal Tariff Rates’ and covering nearly 70 nations, Trump maintained the 25 per cent tariff rate for India while slashing it for Pakistan from 29 to 19 per cent.

The tariffs in the list range from 10 per cent to 40 per cent. Laos and Myanmar have been charged 40 per cent each; Sri Lanka, Vietnam and Bangladesh 20 per cent, Indonesia 19 per cent; Japan and Afghanistan 15 per cent and the UK 10 per cent. The new order does not modify the tariffs imposed on China in May.

A senior government official in New Delhi said the tariffs would have a marginal impact of less than 0.2 per cent on India’s economic growth. The official said the government would protect the national interest and won’t budge to any pressure from the US.

Another official privy to the trade deal negotiations said the talks with the US were moving in a positive direction. The US team is scheduled to visit New Delhi on August 25 for the sixth round of talks.

During the negotiations, he said, New Delhi would prioritise the welfare of farmers and the micro, small and medium enterprises sector. He said India would not open its farm and dairy sector to the US.

New Delhi also has ecological concerns about the genetically modified crops, which the US wants to export to India. Allowing the import of subsidised US crops like corn, soybeans and rice could flood the Indian market, slashing local prices and threatening the livelihoods of millions dependent on the agriculture sector.

Similarly, the dairy market is an even bigger red line as nearly 80 million small farmers are employed in the sector. A State Bank of India report assessed that opening the sector could lead to a 15 per cent drop in milk prices, costing farmers Rs 1.03 lakh crore annually. India is also insisting on strict certifications to ensure milk came only from cows fed vegetarian diet, aligning with the country’s cultural and religious sensitivities.

Though several sectors are exempted from the tariffs, the government is expecting a dip of around 6 to 7 per cent in outbound ships to the US if the duties existed for a longer period. In 2024-25, India exported nearly $87 billion worth of goods and had a trade surplus of over $40 billion.

According to Global Trade Research Initiative, finished pharmaceutical products (tablets, injectables and syrups), active pharmaceutical ingredients, electronics and information and communication technology goods, and energy products such as crude oil, natural gas, refined fuels, coal, etc. will be exempted from the 25 per cent tariffs.

The tariffs are likely to be assessed after both the countries finalised their agreement. India and the US announced the agreement in February this year with an objective to increase the bilateral trade to $500 billion by 2030.