Tharoor warned that Indian exports could lose out to regional competitors enjoying more favourable trade terms. (Image Source: X)
Reacting sharply to U.S. President Donald Trump’s recent decision to slap an additional 25% tariff on Indian goods, bringing the total U.S. tariff on Indian exports to a steep 50%, Congress MP Shashi Tharoor warned that the move would deliver a serious blow to India’s exports and global competitiveness.
“This isn’t good news for us. A 50% tariff makes our goods unaffordable in the American market,” Tharoor told reporters on Tuesday. “When you compare these rates to tariffs on countries like Vietnam, Indonesia, Bangladesh, or even Pakistan, it’s clear they now have a significant edge.”
On August 5, 2025, President Donald Trump signed an executive order invoking powers under the International Emergency Economic Powers Act (IEEPA) and the Trade Act of 1974, levying the additional 25% tariff. The White House gave the excuse of India's "continuing crude oil commerce with Russia." The move came just hours before the earlier 25% tariff was set to be enforced on August 7. The new hike will come into effect 21 days later.
The Trump administration insists that allies must align with Washington’s efforts to isolate Moscow economically. However, the Indian government has slammed the decision, calling it “unjustified, unilateral, and protectionist,” especially when the U.S. and European nations themselves maintain energy links with Russia.
While the Indian government has denied issuing formal orders, state-run refiners have paused new spot-market Russian crude purchases in recent days. Analysts warn that a complete pivot away from Russian oil could inflate India’s energy import bill by $9–11 billion and stoke domestic inflation.
Also Read: Boris Lauds Trump’s Tariff Hits On India’s Russian Oil Imports
Tharoor said the crisis underscored the need for India to urgently diversify its export markets. “We’ve signed an FTA with the UK and are negotiating with the EU. These could become vital lifelines,” he said. “But in the short term, this is a heavy blow.”
The Congress leader further warned that if countries like the Philippines and Bangladesh can offer cheaper alternatives in sectors like garments, machinery, and light manufacturing, “American buyers will shift away from Indian exporters.”
India’s Ministry of Commerce is reportedly preparing a formal trade complaint to the WTO, and backchannel diplomatic efforts are underway to seek exemptions for specific goods. But with Trump doubling down on his “America First” energy-aligned foreign policy, India may have to brace for deeper economic realignments.
