Trump’s India tariffs take effect: Which sector will be hit, what’s exempt?

“Who will fund the subsidy? Will it be taxpayers or some of the big companies that benefitted from the Russian oil exports? So, there is no clarity on the details of how the subsidies would be provided. Even if subsidies are provided, it won’t be enough to cushion such a huge hit,” Venu told Al Jazeera from New Delhi.

He said that the government did not prepare for what was coming. “India should have had a policy, it should have done its homework because we knew that Trump was not going to relent, he was going to punish India for buying Russian oil.”

Indian policymakers will now be forced to rethink the overreliance on the US market, the Indian media reported on Wednesday. New Delhi might also explore the possibility of joining multilateral trade pacts – a move it had resisted in the past. The country has also signed bilateral trade arrangements with dozens of countries, and efforts are on to conclude a trade deal with the European Union by the end of this year.

Ahmed from the Fore School of Management said that the tariffs “shouldn’t have a significant impact on India’s GDP… probably around 1 percent”.

Teresa John, lead economist at Nirmal Bank, echoed Ahmed: “We estimate a [negative] impact of about $36bn, or 0.9 percent of GDP,” she told Reuters.

Earlier this year, the International Monetary Fund forecast that India’s economy would grow by 6.4 percent in 2026. That could change.

What reason has Trump given for tariffs?

Talks to defuse a trade war broke down after five rounds of negotiations, following Trump’s calls for India to halt its imports of Russian oil and gas.

Despite the persistent threat of higher US tariffs, India has continued to buy Russian crude this year – albeit at falling levels.

New Delhi has also been hit because of the geopolitical rivalry between Russia and the West. Top Trump officials, including US Treasury Secretary Scott Bessent, have accused India of funding Russia’s war against Ukraine. He pointed out that India’s Russian oil imports went from 1 percent before the Ukraine war to 37 percent. He accused India of “profiteering”.

India’s foreign ministry said that New Delhi would “take all necessary steps to protect its national interests” and pointed out that Russian oil imports were driven by market forces and the energy needs of the country’s 1.4 billion people.

New Delhi has also accused Washington of selectively targeting India for purchasing Russian oil, when both the European Union and China – with whom Trump has brokered trade deals – continue to import energy from Russia.

Trump, who has unleashed a tariff war that has shaken the global economy, has been highlighting the high tariffs imposed by India.

“India has been, to us, just about the highest-tariffed nation anywhere in the world. It’s very hard to sell to India because they have trade barriers and very strong tariffs,” Trump said during Prime Minister Modi’s visit to the US in February.

New Delhi pledged to remove levies on certain industrial goods from the US and to increase defence and fuel purchases – to assuage Trump’s grievances over trade imbalances. But it refused to open its vast farming and dairy sector to cheap US imports.