Trade war | Trump announces customs duties of 50 % on Indian products

(Washington) Donald Trump imposed additional customs duties on Indian products on Wednesday 25 %, reproaching New Delhi its Russian oil purchases, shortly before the entry into force of new surcharge for the main trade partners of the United States.

This surcharge is added to that of 25 % which must come into force at 0:01 (Eastern time), at the same time as the customs duties that Donald Trump presents as “reciprocal”, and will only be effective in 21 days, according to a decree of the American president. It will not apply to a number of products, which significantly reduces its scope.

Among the exemptions, there are in particular the products concerned by sectoral customs rights, such as steel and aluminum, or those which will soon be, such as pharmaceuticals or semiconductors.

This also concerns, in the immediate future, smartphones. Apple, in particular, moves more and more its production of iPhone in India, hitherto manufactured in China.

The American president, however, announced on Wednesday his desire to tax semiconductors 100 %, without specifying the date of entry into force of this new sectoral surcharge.

These new customs duties aim to reduce Moscow’s ability to finance the conflict in Ukraine, presented in the decree as “an unusual and extraordinary threat to national security and foreign policy of the United States”.

In a statement, the Indian Ministry of Foreign Affairs judged this surcharge “extremely regrettable”, stressing that “several other countries” buy Russian oil “in their own national interest”.

After China, India is the main Russian customer for its oil, which in 2024 represented almost 36 % of its imports in this area, against around 2 % before the start of the war in 2022, according to data from the Indian Ministry of Commerce.

For New Delhi, this choice wanted to be pragmatic while the production of the Gulf countries went primarily to Europe when it chose to do without Russian hydrocarbons, forcing India to seek other suppliers.

On Wednesday, Prime Minister Narendra Modi dispatched his national security advisor to Moscow to discuss the subject, according to the Indian press, at the very moment when the White House Steve Witkoff was there.

“This marks a low point in Indo-American relations,” said South Asia Initiative Director Farwa Aamer. “India does not want to question its relations with Russia”, but will be under pressure to find a solution with Washington.

Obvious economic impact

If this surcharge constitutes a shock for India, it remains lower than the threat brandished for several weeks by Donald Trump to impose 100 % customs duties on products from countries buying Russian oil if Moscow refused a cease-fire in Ukraine.

This decree occurs less than 24 hours before the entry into force of customs duties targeting most of the United States’s business partners and that Donald Trump justifies by the need, according to him, to rebalance the exchanges.

Several dozen of them must indeed see the surcharge applied to their products increase significantly Thursday, when they entered US territory, with a range ranging from 15 % to 41 %, Syria being the country targeted by the highest rate.

For India, the rate applied to its products entering the United States will initially be 25 %.

The additional 25 % planned by the new decree would bring it to the level of the rate in force since Wednesday on Brazilian products, or 50 %.

Initially spared, Brazil was finally targeted in retaliation for the prosecution launched against ex-President Jair Bolsonaro, ally of Mr. Trump and accused of an attempted coup after his defeat during the 2022 presidential election.

But due to the many exemptions provided for by the decree, only 36 % of the country’s exports to the United States are really concerned, according to the Brazilian government.

In total, new customs surcharge should bring the average effective rate to almost 20 % in the United States on Thursday, according to analysts at Pantheon Macroeconomics. This would constitute the highest rate applied to imported products since the early 1930s, according to the LAB budget of Yale University.