Why in News?
U.S. President Trump imposed an additional 25% tariff on Indian imports, raising total tariffs to 50%, citing India’s continued oil trade with Russia. India condemned the move as unjustified, warning it contradicts U.S. trade norms and penalizes bilateral relations.
Description:
What is a Tariff?
| Term | Description |
| Tariff | A tax imposed by a government on imported goods to protect domestic industries, generate revenue, or respond to trade disputes. |
| Types | – Ad Valorem: based on value (%) – Specific: fixed charge per unit |
| Purpose | – Protect local industries – Correct trade imbalances – Penalize foreign trade practices |
Context: Trump’s 2025 Tariffs on India
| Detail | Explanation |
| Announced by | U.S. President Donald Trump (2025 re-elected) |
| Nature of Tariff | 25% base tariff on Indian imports + possible 10% penalty (total 35%) |
| Justification | – India’s “unfair trade barriers” – Strategic ties with Russia – Large U.S. trade deficit with India |
Sectors Hit in India:
| Most Affected Sectors | Details |
| Textiles & Garments | Major export to U.S., loses cost edge |
| Jewellery & Gems | U.S. is top importer of Indian precious stones |
| Leather Goods | Faces stiff competition from Vietnam, Indonesia |
| Auto Components | Value chains hit |
| Electronics | Impact on Make in India-linked exports |
Macroeconomic Impact on India:
| Indicator | Impact |
| GDP Growth | Estimated to fall from 6.6% to 6.4% |
| Exports | Decline in competitiveness in the U.S. |
| Forex Reserves | Increased pressure due to export dip |
| Investor Sentiment | Weakened amid trade uncertainty |
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