Trump doubled tariffs on India to 50% this week, the highest in Asia, penalizing the country for its purchases of Russian oil. The levies will hurt labor-intensive industries such as textiles and jewelry hardest and risk eroding India’s export competitiveness against rivals like China and Vietnam. Citigroup Inc. estimates the tariffs could reduce India’s annual growth by 0.6–0.8 percentage points.
Tariff worries pushed India’s rupee to a record low against the dollar on Friday. The local currency was trading at 88.2388 a dollar at 2.25 p.m. local time, down nearly 0.61%, breaching its previous all-time low of 87.9563 in February. The rupee is Asia’s worst-performing currency this year, pressured by persistent foreign outflows from local equities.
India’s government has decried the tariffs as unfair, and has said it will keep buying Russian oil as long as its financially beneficial.
The US and India had earlier this year signed a framework agreement for a bilateral trade deal, committing to finalizing the first tranche of that pact by the fall of this year.
New Delhi will keep working with Washington toward that bilateral trade deal although no date has been set for the next round of talks, the official said. A US trade team that was scheduled to arrive in India on Aug. 25–29 for a sixth round of trade talks had deferred its visit.
A trade deal between the two nations can’t be signed until both the reciprocal tariffs and the secondary duties over Russian oil purchases are scrapped, the official said.
