The United States is set to impose a 50 per cent tariff on Indian goods, effective at 12:01 am (EDT) or 9:31 am (IST) in India, raising strains in US-India relations.
US tariffs are set to impact Indian exports worth $60.2 billion, according to the Global Trade Research Initiative (GTRI). Labour-intensive sectors including textiles, gems, jewellery, shrimp, carpets, and furniture could see shipments fall by up to 70%, affecting millions of workers.
The duties cover around 66% of India’s exports to the US, valued at $86.5 billion in FY 2025. If the tariffs remain, exports could decline to $49.6 billion next year, with competitors like China, Vietnam, and Mexico likely to take advantage of the gap in the US market.
The Trump administration has signalled that it will not delay the additional levies and has issued a draft notification confirming the move, which will impose an extra 25% duty on top of existing tariffs. According to US President Donald Trump, the higher levies are intended to push Russian President Vladimir Putin toward negotiations with Ukraine.
According to Reuters, exporter groups estimate that the tariff hikes could impact nearly 55 per cent of India’s merchandise exports to the US, worth around $87 billion, while giving an edge to competitors including Bangladesh, China, and Vietnam.
The sectors hit include textiles and apparel, gems and jewellery, shrimp exports, and leather products.
An analysis by Moody’s Analytics warns that the new US tariffs on Indian goods will sharply reduce demand for exports.
"The drop in sales to their largest client will hurt," the report said, noting that the tariffs have left countries across Europe and the Asia-Pacific "feeling bruised" as the US remains their top trading partner. Moody’s added that some firms may cut prices to maintain sales volumes, but doing so could squeeze margins, limit wage growth, and reduce investment, affecting overall business performance.
Analysts say pharmaceuticals, smartphones, and steel are expected to remain relatively insulated from the US tariffs. Exemptions in the tariff structure and strong domestic demand in India could help these sectors absorb part of the economic shock.
The tariff escalation could affect broader strategic ties. The US has long aimed to draw India closer through initiatives like the Quad -- a security grouping with Australia and Japan designed to counter China. Earlier this year, India’s Foreign Affairs Minister S Jaishankar expressed willingness to strengthen the Quad’s defence and security focus. Tariff tensions now jeopardise these efforts.
Speaking in Ahmedabad after launching multiple projects, Prime Minister Narendra Modi said that India would not compromise on the interests of farmers, small industries, and domestic producers. "Pressure on us may increase, but we will bear it all," he said, urging citizens and businesses to prioritise swadeshi goods. PM Modi said that his government will find a way out regardless of the economic pressure by Washington.
The US President signed an executive order imposing an additional 25 per cent tariff on Indian goods, bringing the total to 50 per cent on August 6, 2025. The additional tariffs are to be applicable after 21 days from today, coming into effect on August 27, according to an order signed by Trump.
India has issued no directive yet on oil purchases from Russia. New Delhi’s envoy to Moscow said that India will continue purchasing oil from sources offering the "best deal" despite mounting US tariffs on Indian goods.
"Our objective is energy security of 1.4 billion people of India and India’s cooperation with Russia as well as several other countries has helped to bring about stability in the global oil market," he added.
The United States formally issued a public notice on Tuesday imposing an additional 25 percent tariff on imports from India, effective at 12:01 am (EDT) on August 27, or 9:31 am (IST) in India. The notice, issued by the Department of Homeland Security through US Customs and Border Protection (CBP), implements President Donald Trump’s Executive Order 14329, signed on August 6.
Vice President JD Vance defended the strategy on NBC’s Meet the Press, calling it "aggressive economic leverage" against Russia. He added, "Maybe we will apply additional pressure, or maybe we feel like we are making progress, and we will dial that pressure back. We still have a lot of cards left to play."
Five rounds of intensive negotiations between March and July 2025, with Indian officials, failed to produce a solid outcome. Following the talks, US President Donald Trump imposed a 25 per cent tariff on Indian imports on July 30, with an effective date of August 7, 2025. He cited India's high tariffs and trade barriers. He also called India’s economy 'dead.'
The Ministry of External Affairs has previously called the tariffs "unfair, unjustified, and unreasonable," warning that India will take "all necessary steps to protect its national interests."
Source: India Today
