The tariff imposed on Indian exports to the United States is likely to reduce demand for Indian goods “very substantially”, The Hindu quoted a report by global ratings agency Moody’s as saying on Monday.
On July 30, Washington announced a 25% levy on goods imported from India as part of the so-called reciprocal tariffs on dozens of countries that have not finalised separate trade agreements with the US.
On August 6, US President Donald Trump imposed an additional 25% tariff on Indian goods for purchasing Russian oil. This raised the US tariff rate on Indian goods to 50%.
The Moody’s report stated that India has “experienced a sudden deterioration in its relations” with the US, reported The Hindu.
“Given that we now expect tariffs to remain in place for the remainder of Trump’s presidency, the drag on growth, particularly on investments and exports, will be notable,” it added.
The agency stated that India’s response to these developments will determine the effect on its growth, inflation and external position.
India ‘cozying up to Russia, China’, claims US
Meanwhile, White House Trade Advisor Peter Navarro has said that India needs to start acting like a strategic partner of the United States if it wants to be treated as one, claiming that New Delhi was “now cosying up to both Russia and China”.
In an opinion piece in The Financial Times, Navarro, one of Trump’s closest advisors, wrote: “India acts as a global clearinghouse for Russian oil, converting embargoed crude into high-value exports while giving Moscow the dollars it needs.”
India has pushed back against the US, pointing to “double standards”, since Washington has not targeted China or Europe for their purchases of Russian energy.
After Trump announced the 25% additional tariff on August 6, New Delhi called the move “unfair, unjustified and unreasonable” and said it would take “all actions necessary” to protect its national interests.
India also noted that oil imports from Russia had risen as its traditional suppliers were diverted to Europe, and that the US had “actively encouraged such imports by India for strengthening global energy market stability”.
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