Tariff Turmoil: U.S.-India Trade Relations on the Brink

Indian opposition parties lashed out at the government on Thursday, condemning U.S. President Donald Trump's 25% tariff threat as a major diplomatic setback for New Delhi. The announcement sent the rupee and equity indexes tumbling, casting a shadow on India's economic prospects.

This steep tariff singles out India, more so than other major U.S. trading partners, and threatens to disrupt months of strategic talks aimed at countering China's influence in the region. Trump declared the tariff on Indian imports would commence on Friday, alongside penalties for Russian dealings, but mentioned trade negotiations were still ongoing.

Prime Minister Narendra Modi's government is examining Trump's statement's repercussions while striving for a fair trade deal. Economists warn the tariff could jeopardize India's manufacturing growth, potentially shrinking economic growth by 40 basis points by March 2026. Meanwhile, the Nifty 50 and BSE Sensex fell by 0.6%, and the rupee hit a five-month low before recovering slightly.

(With inputs from agencies.)