Between India and the United States, several significant commodities are exchanged. Crude oil leads among Indian imports from the US, valued at $4.5 billion, trailed by petroleum derivatives worth $3.6 billion and coal along with coke, totalling $3.4 billion. Refined and polished gemstones coming in at $2.6 billion, electrical machinery amounting to $1.4 billion, aerospace crafts and their components costing $1.3 billion, and gold rounding up to $1.3 billion are among the other primary imports.
In 2024, numerous products made up the lion’s share of exports from India to the US. These included drug formations and biologicals, valued at $8.1 billion, telecommunications apparatus worth $6.5 billion, and precious as well as semi-precious gemstones amounting to $5.3 billion. Also included in this group are petroleum solutions ($4.1 billion), automotive and related components ($2.8 billion), gold and other precious ornaments ($3.2 billion), cotton clothing and accessories ($2.8 billion), along with iron and steel products ($2.7 billion).
The United States secured the rank of India’s main trade ally in 2024-25, marking four years consecutively. Bilateral commerce valued at $186 billion was conducted in that year, comprising $86.5 billion exports and $45.3 billion imports. The US represented roughly 18% of India’s entirety of exports, contributed to 6.22% of their imports, and held 10.73% share in bilateral commerce.
Indian industry professionals remain optimistic about India’s economic resilience in the face of a 25% tariff on Indian goods implemented by then US President Donald Trump. The general consensus among them was that this decision might cause a short-term impact but would not undermine India’s long-term economic expansion narrative. The new tariff rates imposed on India were more than those levied on its neighbouring countries, with Myanmar being the only exception with a tariff rate of 40%.
The revised tariff rate for Pakistan was 19%, for Afghanistan it was 15%, for Bangladesh it was 20%, for Indonesia and Japan, the rate was 19% and 15% respectively, and for Sri Lanka rate was at 20%. These tariffs were effective starting at 12:01 a.m. Eastern Daylight Time on August 7. The US alleged that they were operating at a significant trade deficit with India, pointing blame at lofty tariffs on American goods from New Delhi that they believe constrain US exports to India.
The American currency displayed robust performance during that period, on track for its most profitable week in close to three years compared to other major currencies. This momentum was maintained after President Trump introduced new tariff rates on a slew of trading partners. In fact, Trump went on to sign an executive order that raised tariffs on Canadian goods from 25% to 35% on all goods not covered by the U.S.-Mexico-Canada trade agreement.
Items directed to other countries to sidestep the new tariffs would be slapped with a transshipment levy of 40%, as per the White House fact sheet. This decision was partially linked with alleged inaction by Canada in curbing shipments of the narcotic fentanyl. This represented a more recent skirmish in the ongoing tariff dispute initiated by Trump shortly after he took office.
The statement blaming Canada’s ‘continued retaliation and inaction’ was released following President Trump’s claim that Canada’s Prime Minister Mark Carney attempted to communicate before the August 1 tariff deadline, even though no discussions transpired. Trump issued a stringent warning that any country failing to negotiate a deal with the U.S. before the coming Friday would face a substantial increase in tariffs on goods.
As anticipation built up towards Trump’s announcement of new tariff hikes, domestic manufacturing sectors reliant on global supply chains began to reckon with the potential financial ramifications. Preliminary analysis indicated that manufacturing costs could be boosted by approximately 2% to 4.5%. Apparently minor cumulative adjustments may pose significant threats to factories operating on slender profit margins, potentially resulting in wage stagnation, layoffs, or even complete plant shutdowns if costs become prohibitive.
The eventual outcome of Trump’s policies hinges on whether ordinary Americans prosper and if factory-dominated towns enjoy a resurgence, objectives economists outside his administration doubt are feasible through the implementation of tariffs. Furthermore, Trump unveiled new negotiation frameworks with the European Union, Japan, the Philippines, Indonesia, and Britain, aiming to increase each entity’s import duties charged by the United States.
Prepared to impose tariffs against goods from a multitude of other countries, the proposed range stated was between 15% to 50% beginning on the subsequent Friday. In response to the latest round of tariffs on exports from several trading partners – and a reiterated 25% duty on India-looming ahead of a trade agreement deadline, India’s stock market showed a declining trend on the following Friday.
India’s Nifty 50 index dropped 0.33% to 24,685.15 points, and the BSE Sensex index dipped 0.28% to 80,970.31 by 10:02 a.m. IST. Both indices endured declines, with 14 out of the 16 major sectors suffering a downturn, while the broader smallcaps and midcaps sectors experienced approximately 0.75% each in losses.
Asian markets reported a mostly negative performance on that Friday, as President Trump announced tariffs on a wide list of trading partners right before his self-imposed deadline. This negative market reaction managed to eclipse strong earnings showcased by tech mammoths. As crunch time approached for governments to negotiate deal averting tolls, Trump presented a comprehensive list of hefty levies he had decided to impose upon those still undergoing negotiations.
Most Asian stocks saw a downward trend as economies began to grapple with the potential impact on the global economy. Markets from Tokyo, Hong Kong, Shanghai, Sydney, Wellington and Taipei all reported a slump. Thus, the global economy braced itself for the unfolding chain of events resulting from these dynamic tariff negotiations.
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