U.S. Plans 50% Tariff on Indian Goods Over Russian Oil Purchases, Sparking Trade War

Indian officials have denounced the measure as an “unfair secondary tariff,” arguing that the United States is using trade as a geopolitical lever rather than a commercial one. New Delhi has already notified the World Trade Organization of its intent to launch retaliatory duties and has begun drafting a list of U.S. products that could be targeted in response. In a parallel effort, the Indian embassy in Washington hired a lobbying firm with close links to the Trump administration, hoping to soften the political climate and averting the steep levy before it takes hold.

The proposed tariff would hit a range of high‑value Indian exports for which the United States is the top market. Textiles and ready‑made garments, automotive components, steel, and the country’s storied gems and jewelry industry would see their competitiveness erode by roughly 30‑35 percent relative to rivals such as Vietnam, Bangladesh and Japan. Analysts at Moody’s warn that the “Make in India” ambitions that have driven recent policy pushes could be severely dented, with ordering cycles stalling, customer attrition accelerating and profit margins compressing across the board.

The knock‑on effects could cascade deeper than the headline‑rate tariff. By targeting intermediate goods as well as final products, the policy threatens to reconfigure supply chains that have, over the past decade, become tightly interwoven with U.S. manufacturers. Morgan Stanley projects a 60‑basis‑point drag on India’s gross domestic product — roughly $23 billion in lost output — if the full 50 percent rate is applied across the board. Citi’s research estimates an annual $7 billion hit to the Indian economy, while domestic analysts contend that nearly 87 percent of India’s total exports to the United States would be affected.

Beyond the balance‑sheet, the tariff could strain India’s labour market. The manufacturing and export sectors that would bear the brunt of the duties employ millions, and a sharp contraction could swell unemployment numbers, fueling broader social unease. Although the immediate impact is on overseas sales, a prolonged tariff environment may force Indian firms to shift production domestically, a transition that could raise consumer prices for certain goods and modestly increase households’ cost of living. The policy is also likely to inflame nationalist sentiment, with public opinion turning sharply toward criticism of the government’s diplomatic handling of the dispute.

Politically, the move marks a steep downturn in a relationship that has enjoyed a largely positive trajectory under successive administrations. Observers note that the 50 percent tariff, if enforced, would represent the deepest drop in U.S.–India trade ties since Washington’s “America First” turn under President Donald Trump. Trade negotiations that had been inching forward have stalled, and the emerging stalemate underscores the growing conflict between U.S. strategic goals in the Indo‑Pacific and New Delhi’s security‑driven foreign policy, particularly its decision to keep buying Russian oil despite Western sanctions.

The dispute also raises substantive questions about the role of multilateral trade rules. India has warned that the United States’ tariff action contravenes World Trade Organization regulations, and it has already invoked WTO provisions that allow it to suspend equivalent concessions while the case proceeds. The legal back‑and‑forth could expand the controversy beyond bilateral talks, potentially drawing in other trading blocs that are watching the United States’ increasingly aggressive use of tariffs as a diplomatic weapon.

Social media in China has taken note, with the hashtag #美拟对印度征50%关税# rapidly climbing Weibo’s trending list, reflecting broader global interest in the saga. The online chatter underscores how the United States’ trade strategy is feeding a narrative that extends far beyond the two economies directly involved.

In sum, Washington’s proposed 50 percent tariff on Indian goods is poised to deliver a shock to New Delhi’s export sector, dent economic growth, and strain a relationship that has long been touted as a cornerstone of Indo‑Pacific stability. While the Indian government is mobilising diplomatic, legal and lobbying tools in response, the longer‑term outcome will hinge on whether both sides can find a path through the impasse, or whether the tariff will become a permanent fixture reshaping trade flows and geopolitical calculations for years to come.