From Ally to Adversary? Donald Trump’s Nod to 500% Tariff Sends Shockwaves Through India

Washington: A wave of concern swept through India’s business and policy circles after a senior US lawmaker revealed that President Donald Trump has approved a proposal paving the way for a massive 500 percent tariff on Indian exports to the United States. If enforced, the move could dramatically alter trade flows between the two countries and place fresh stress on India’s export-driven sectors.

Economists warn that the sharp hike in duties could hit India’s micro, small and medium enterprises (MSMEs) the hardest. Many of these businesses are already struggling under existing trade barriers and rising input costs. A steep tariff jump, analysts say, could trigger widespread job losses, particularly in labour-intensive industries that rely heavily on the US market.

Trade experts stress that the real impact will depend on how the US administration designs the tariff framework. In previous rounds of tariff hikes, certain sectors such as pharmaceuticals, semiconductors and aluminium products were granted exemptions, limiting the overall damage. This time, however, uncertainty prevails, and Indian authorities are waiting for detailed notifications before formulating a response.

Industry estimates suggest that exports from sectors like gems and jewellery, marine products, electronics, steel and pharmaceuticals could take a major hit. Analysts project potential export losses ranging between $7 billion and $10 billion if higher duties are enforced across the board, weakening India’s trade balance and foreign exchange earnings.

India’s policy options appear limited in the short term. While taking the dispute to the World Trade Organization remains a possibility, economists point out that the process is slow and may not yield immediate relief. Moreover, past experience suggests that the Trump administration may not readily comply with adverse rulings.

Some experts believe Washington is using tariffs as leverage to push India into buying more American crude oil. Similar trade tensions with other regions have eased after increased energy purchases from the US. Although India has already ramped up imports of US crude significantly over the past year, specialists caution that Indian refineries are optimised for Russian and Middle Eastern oil, making rapid large-scale shifts difficult.