Trump's 'secondary tariffs' first target: India... "iPhone prices to rise in the U.S."

India, first target of 'secondary tariffs' on Russian oil importers

Tariff rate of up to 50% imposed on India

India, a major production hub for iPhones

Tariff burden likely to be passed onto consumers↑

Donald Trump, the U.S. President who had announced 'secondary tariffs' on countries importing Russian oil, has made India his first target. A 50% tariff rate will be imposed on India, a major iPhone manufacturing country for Apple, dealing a direct blow to iPhone prices sold in the U.S.

On the 6th (local time), President Trump announced that he would impose an additional 25% tariff on Indian products, bringing the total tariff rate up to 50% when combined with the existing reciprocal tariff (25%).

As a result of this measure, international energy prices are expected to rise. According to the BBC, experts predict an increase in global energy prices. Existing importers of Russian crude oil including India may seek alternative suppliers due to the pressure from secondary tariffs, leading to reduced market inflows of Russian oil and intensifying upward pressure on prices.

The BBC reported that this rise in oil prices could trigger inflation, potentially resulting in a situation similar to Russia's full-scale invasion of Ukraine in 2022. Kieran Tompkins, an expert at consulting firm Capital Economics, analyzed, "The key channel through which secondary tariffs on countries purchasing Russian energy could impact the global economy is energy price levels."

On the other hand, there is also speculation that international oil prices could remain relatively stable. This is because the production capacity of the U.S., OPEC, and OPEC+, a coalition of major oil-producing countries, may offset the supply decrease from Russia.

President Trump has repeatedly emphasized that, thanks to America's record-high oil production levels, he is not concerned about inflation caused by rising oil prices. Tompkins stated, "OPEC+ currently has considerable spare production capacity."

However, India, now the immediate target of the U.S. 'secondary tariffs,' faces an urgent crisis. With tariffs reaching 50%, Indian products are likely to lose competitiveness against other countries. This amounts to a direct blow to its exports.

Notably, India is one of Apple's major iPhone assembly bases. Apple has recently been relocating a substantial portion of iPhone assembly for U.S. sales to India. If the secondary tariffs take effect, prices for iPhones sold in the U.S. could rise significantly.

The BBC pointed out, "This is one example where Americans may feel the price increase resulting from the new secondary tariffs," adding that "most of the increased costs due to tariffs will be passed on to consumers."

The newly announced secondary tariffs on India will take effect in 21 days.

Park Subin, Hankyung.com reporter waterbean@hankyung.com