India–US Trade Relations & Tariff Issues

Why in News?

India is deepening crude oil trade ties with Brazil as both nations face steep U.S. tariffs under President Trump. Rising American pressure over Indian imports of Russian oil has accelerated New Delhi’s diversification efforts to secure alternative energy sources.

Description:

1. Tariff Escalation:
   1. U.S. President (Trump) using tariffs under the “Make America Great Again” agenda.
   1. Additional 25% penalty tariffs imposed over India’s energy ties with Russia.
   1. Major hits expected on textiles, auto components, chemicals.
2. India’s Trade Response:
   1. India reduced duties on items (bourbon, removed equalization levy) to facilitate talks.
   1. Despite concessions, talks failed due to agriculture & auto market access disputes.
   1. Government exploring WTO-compliant support mechanisms (since subsidies may breach WTO rules).
3. Diplomatic & Political Angle:
   1. India’s BRICS role + Russian crude imports viewed negatively by U.S.
   1. The U.S. accused India of indirectly financing Russia’s Ukraine actions.
   1. Farmers’ bodies (Bharatiya Kisan Sangh, Swadeshi Jagran Manch) opposed U.S. agri demands citing food security risks.
4. Economic: Implications
   1. Effective tariff jump: 2.3% → 18%.
   1. Key export sectors hit: textiles, auto components, chemicals.
   1. Pressure on India’s export competitiveness in the U.S. market.
5. India’s top export items to the U.S.: gems & jewellery, textiles, pharma, engineering goods, IT services.
6. U.S. = India’s largest trade partner (merchandise + services combined).
7. WTO rules: export subsidies prohibited under Agreement on Subsidies and Countervailing Measures (ASCM).

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