The Congress on Wednesday called United States President Donald Trump's announcement on levying a 25% tariff on goods imported from India from August 1 a “catastrophic failure of foreign policy”.

“An entire nation suffers from the consequences of one man’s ‘Friendship’,” the Opposition party said on X.

Congress leader Jairam Ramesh added that “all that taarif [praise] between him [Trump] and Howdy Modi has meant little”.

He also criticised Modi for not rebutting the US president’s claims of brokering a ceasefire deal between India and Pakistan in May.

Ramesh said: “Mr. Modi thought that if he kept quiet on the insults…India would get special treatment at the hands of President Trump. Clearly that has NOT happened.”

The head of the party’s social media department, Supriya Shrinate, said that the tariffs would be “disastrous for the Indian economy” and remarked that “this comes despite Mr Modi bending backwards to woo Mr Trump”.

“This is a clear sign of how the BJP Govt and the Prime Minister have compromised India’s national interest,” she added.

Move will increase uncertainty, say industry bodies

The Federation of Indian Chambers of Commerce and Industry said that the United States’ decision will increase uncertainty for Indian exporters in the near term. “We hope that this move is short lived and that the two countries will arrive at a mutually beneficial trade agreement soon,” the organisation’s Senior Vice President Anant Goenka said.

FICCI said it was hopeful that India and United States will make progress in their discussions on a trade deal and complete their negotiations by September or October. The organisation expressed hope “that the final agreement will bring good results for both countries”.

The Confederation of Indian Textile Industry said that the new US tariff rate would present a stiff challenge for India’s textile sector.

“Without a doubt, the new tariff rate is going to seriously test the resolve and resilience of India’s textile and apparel exporters as we will not enjoy a significant duty differential advantage vis-à-vis many other countries, except Bangladesh, with whom we compete for a larger share of the US market,” CITI chairperson Rakesh Mehra said.

Mehra added that the lack of clarity on the “penalty” amount added to the uncertainty for businesses.

Trump’s announcement on Wednesday came after Indian markets had closed. However, NDTV Profit quoted traders as saying that they expect the Indian rupee to open at 87.75 to 88 per dollar.

The rupee on Wednesday settled at a five-month low to 87.42 per dollar, significantly down from 86.81 a dollar on Tuesday.

Studying implications, says Centre

The Union Ministry of Commerce and Industry said on Wednesday evening that the government is studying the implications of the United States’ decision, and that it will take all steps necessary to secure national interests.

“India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months,” the ministry said. “We remain committed to that objective.”

US tariffs

Trump on Wednesday cited “far too high” tariffs on American goods, non-trade barriers and the procurement of arms from Russia as the reasons for imposing 25% tariffs on India.

The US President also said that India will also have to pay a “penalty” for buying a large portion of its military equipment from Russia. However, he did not specify the quantum of the “penalty”.

The United States has said it will impose “reciprocal” tariffs on dozens of countries that have not negotiated separate trade agreements with it by August 1.

Trump announced higher levies in April, before pausing those tariffs at a reduced 10% rate to allow time for negotiations. Despite an extended deadline, Trump has only secured a handful of deals.

On Monday, the US president had said that he would likely introduce a global baseline tariff between 15% and 20% for countries that had not negotiated trade deals with his administration.

Trump had said on June 27 that New Delhi could sign a “very big” trade deal with Washington soon. On July 2, the White House said that the deal was close to being finalised and would be announced soon.

An Indian team led by Union Commerce Minister Piyush Goyal had visited the US in May to negotiate the agreement. Following this, a team of negotiators from the US was in India for a week in June.