US announces new tariffs on India & others; marks new era of American protectionism

NEW YORK: US President Donald Trump unveiled sweeping new tariffs on dozens of countries including 25 per cent duties for goods from India, marking a new era of American protectionism that triggered fresh tensions and concerns over a much wider disruption in the global trade landscape.

The US president signed an executive order that raised tariffs for over five dozen countries with Washington's negotiations for trade deals went down to the wire ahead of the August 1 deadline.

In the Executive Order titled 'Further Modifying The Reciprocal Tariff Rates', Trump announced tariff rates for nearly 70 nations.

A 25 per cent “Reciprocal Tariff, Adjusted” has been imposed on India, according to the list released. The executive order however does not mention the “penalty” that Trump had said India will have to pay because of its purchases of Russian military equipment and energy.

On Wednesday, Trump announced the 25 per cent tariff on India and an additional penalty for New Delhi's purchases from Russia.

While August 1 was the tariff deadline, the new levies will come into effect from August 7.

In April, Trump had announced that India will face a 26 per cent “discounted reciprocal tariff”, a per cent higher than the rate announced now.

Responding to the executive order, Senior Vice President of the Asia Society Policy Institute (ASPI) and former Deputy US Trade Representative Wendy Cutler said in a statement that India, a “promising candidate for an early agreement”, was assigned a 25 per cent tariff.

This "calls into question the fate of a bilateral trade agreement. The President's annoyance with India on a range of trade and broader matters rang through his Truth Social post,” Cutler said.

Federation of Indian Export Organizations (FIEO) Director General Ajay Sahai said that the order provides relaxation for goods in transit and those loaded on ship for final sailing to the US by August 7.

Goods cleared for consumption in the US by October 5 will also not be subject to reciprocal tariffs, thus providing some relief to exporters of goods already shipped or likely to be shipped this week.

According to Cutler, US customs officials will face challenges implementing the executive order, particularly with the different tariff rates now applied across the world.

The seven-day breathing period before implementation will help, but importers should expect start-up problems at a minimum.

“US companies will also face challenges as they navigate this new tariff landscape. Of particular concern is the continued uncertainties they will face with new sectoral tariffs coming and possibilities of additional tariffs if the Administration believes countries are not operating in good faith in their implementation efforts,” she said.

In the executive order, Trump stated that some trading partners have agreed to, or are on the verge of agreeing to, meaningful trade and security commitments with the US, thus signalling their sincere intentions to permanently remedy trade barriers and align with Washington on economic and national security matters.

“Other trading partners, despite having engaged in negotiations, have offered terms that, in my judgment, do not sufficiently address imbalances in our trading relationship or have failed to align sufficiently with the United States on economic and national-security matters,” he said.

The tariff modifications shall be “effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 am eastern daylight time 7 days after the date of this order.”

The tariffs in the list range from 10 per cent to 40 per cent, with Japan being charged 15 per cent, Laos and Myanmar (40 per cent each), Pakistan (19 per cent), Sri Lanka (20 per cent) and the United Kingdom (10 per cent).

Declaring that the US has a massive trade deficit with India, Trump had said that while “India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any country.

"Also, they have always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of energy, along with China, at a time when everyone wants Russia to stop the killing in Ukraine — All things not good!” Trump said.

He said that India will therefore be paying a tariff of 25 per cent, plus a penalty for the above, starting on August 1.

Trump also mounted a sharp attack on India and Russia for their close ties and said that the two countries can take their "dead economies down together".

"I don't care what India does with Russia. They can take their dead economies down together, for all I care," he said.

"We have done very little business with India, their Tariffs are too high, among the highest in the World," he added.

In its reaction, India said it will take all necessary steps to safeguard and promote national interest and that the implications of the tariffs are being examined.

Trump also referred to India's membership in the BRICS (Brazil, Russia, India, China and South Africa) grouping, which he described as anti-US.