According to a draft notice by the U.S. Department of Homeland Security, new tariffs on Indian products will be set at 50% starting August 27, 2025. This decision doubles the existing tariff rate and aims to penalize India for its continued oil imports from Russia.
India's Response to New Tariffs
Prime Minister Narendra Modi strongly reacted to the new tariffs, stating that India will never compromise the interests of its farmers and small industries. He highlighted the country's resilience to external pressures, drawing inspiration from Lord Krishna and Mahatma Gandhi. External Affairs Minister S. Jaishankar defended India, noting that the direct import of Russian oil by India is significantly lower than that of China or some European countries, which have not been penalized.
Trump's Justification and Reactions
President Trump stated that the tariffs are designed to 'stop wars,' believing that economic penalties may pressure Russia into peace negotiations with Ukraine. However, negotiations between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky remain at a stalemate. Economist Peter Schiff criticized the decision, saying that presidents should not act like businessmen and warned that such actions could be dangerous for future economic policies.
Impact on Global Markets
Immediately following the announcement of the tariffs, global markets began to react negatively. Investors fear that this decision could escalate into a broader trade war. Stocks related to trade between the U.S. and India fell, particularly in sectors like textiles and pharmaceuticals. The tariffs also negatively affected the cryptocurrency market, causing market capitalization and prices for digital assets like Bitcoin to decline.
These new tariffs mark a significant moment in U.S.-India relations and have already had a substantial impact on global markets. Increasing tensions may lead to further economic consequences for both the U.S. and India.
