President Donald Trump's promised 50% tariffs on India took effect Wednesday as the United States risks blowing up a relationship considered crucial in its effort to counter the rise of China.
Trump started the tariff rate at 25% but doubled it this month as punishment for India's buying Russian oil, making it one of the highest of the many tariffs imposed during his ongoing global trade war.
India, one of the world's fastest-growing economies and a key partner for the West in the Indo-Pacific region, relies heavily on trade with the United States, its largest export market.
Prime Minister Narendra Modi has vowed to stand firm in the face of what he termed "the politics of economic selfishness."
The 50% levy risks decades of warming of ties between Washington and New Delhi.
The tariffs are a reversal of the favorable position India seemed to enjoy early in the second Trump administration because of its expanding economic relationship with the United States, its strategic importance in relationship to China and Trump's personal relationship with Modi.
Vice President JD Vance — whose wife is the daughter of Indian immigrants — said Sunday on NBC News' "Meet the Press" that the United States had applied "aggressive economic leverage" on India to "try to make it harder for the Russians to get rich from their oil economy.”
The United States followed through on its threat, which could be a sharp blow to half of India's exports and force affected merchants to diversify to other markets, such as Latin America and the Middle East.
Stock markets in India remained closed Wednesday for a public holiday.
Modi has vowed to defend the country's farmers and small businesses.
“For me, the interests of farmers, small businesses and dairy are topmost. My government will ensure they aren’t impacted,” Modi said at a rally this week in his home state, Gujarat.
India and the United States have yet to reach a bilateral trade deal, even after having held five rounds of negotiations. That's mostly because India is unwilling to open those sectors to cheaper American imports, as it could threaten the livelihood of millions of Indians.
Modi is also under immense domestic pressure not to cave in to the United States, but Trump has shown little sign of softening his demand that India stop buying Russian oil as he shifted his focus in recent weeks to brokering peace in Ukraine.
India's continued purchase of Russian oil is actually informed by past U.S. requests to keep the price of oil low amid Western-led sanctions on Russia.
“They bought Russian oil because we wanted somebody to buy Russian oil,” Eric Garcetti, the U.S. ambassador to India under President Joe Biden, said at a conference last year. "It was actually the design of the policy, because as a commodity we didn’t want oil prices going up.”
India is now paying a steep price for that.
