The decision has led to a sharp depreciation of the Indian rupee and a downturn in the stock markets, reflecting investor concerns over the potential economic repercussions. While sectors such as electronics and pharmaceuticals remain unaffected, industries like textiles and leather are bracing for substantial losses. Experts warn that the tariffs could lead to a 70% decline in exports from these sectors, jeopardising numerous jobs and disrupting established supply chains.
In response, India has defended its oil purchases, citing economic considerations and the need to diversify energy sources. The Indian government has also indicated its intention to seek alternative markets in regions like Latin America, Southeast Asia, and the European Union to mitigate the impact of the tariffs.
Amidst these developments, reports have emerged suggesting a breakdown in communication between the leaders of the two countries. A German newspaper has claimed that President Trump attempted to contact Prime Minister Narendra Modi four times in recent weeks, but the calls went unanswered. This alleged refusal to engage directly highlights the growing diplomatic rift and the challenges in resolving the escalating trade dispute.
The imposition of the 50% tariff underscores the broader geopolitical tensions at play, with the United States aiming to exert pressure on countries like India that continue to engage with Russia amidst ongoing sanctions. While the Trump administration justifies the tariffs as a necessary measure to address national security concerns, critics argue that such actions could have unintended consequences, including disruptions to global supply chains and increased costs for consumers.