Trump slaps 25% tariff on India
New Delhi, Jul 30: In a surprising and major escalation of trade tensions, US President Donald Trump on Wednesday announced that India would face a 25 percent tariff on its exports to the United States starting August 1. He said that the move was in response to what he called India’s high trade barriers and continued defence and energy ties with Russia.
The announcement was made in a post on Truth Social, Trump’s social media platform.
“Remember, while India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary trade barriers of any country,” Trump posted.
“Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of energy, along with China, at a time when everyone wants Russia to stop the killings in Ukraine. All things not good! India will therefore be paying a tariff of 25 percent, plus a penalty for the above, starting on August 1. Thank you for your attention to this matter. MAGA!”
Trump did not clarify the amount or nature of the additional “penalty” beyond the 25 percent tariff.
The announcement follows his earlier public remarks that India, while a “friend”, had imposed “more tariffs than almost any other country” and that reciprocal measures were due unless a trade agreement was finalised.
WHAT’S NEXT FOR INDIA-US TRADE TIES?
The surprise announcement leaves India at a delicate crossroads.
With the August 1 deadline now imminent, policymakers and administration in New Delhi are under pressure to respond to a mix of punitive trade action and diplomatic posturing from a leader they otherwise consider a strategic partner, as when stock markets open, it will have a major impact.
The Trump administration has tied these new tariffs directly to India’s defence and energy trade with Russia, an area where India has maintained strategic autonomy despite Western pressures following the Ukraine war.
India has consistently argued that its Russian defence supplies, including spares and long-term systems like the S-400 missile system, are essential for national security and cannot be abruptly discontinued.
But it is the broader trade picture that now faces immediate turbulence.
India-US bilateral trade crossed USD 130 billion in 2024, with statistics showing that India enjoys a sizable surplus of around USD 45 billion.
Key Indian exports, such as generic drugs, auto parts, textiles, electrical machinery, and jewellery, stand to be affected by the new 25 percent duty.
These goods compete with Asian rivals from Vietnam and Indonesia, which have already struck trade deals with Washington and will face lower tariffs.
Trump’s decision also comes amid stalled negotiations on a bilateral trade agreement.
Despite five rounds of talks and upbeat statements from Commerce Minister Piyush Goyal, no final deal has emerged.
A sixth round is expected in mid-August, when a US delegation arrives in New Delhi.
Trump’s approach to trade has been increasingly transactional.
Earlier this year, he unveiled a “world tariff” policy, a uniform levy of up to 15 percent on imports from countries lacking bilateral agreements with the US.
India had hoped to be exempt through a negotiated deal, but that window appears to be closing.
Still, a reset may be possible.
Trump has historically had a warm personal relationship with Prime Minister Narendra Modi.
He has referred to Modi as a “great friend” and even claimed earlier this year to have facilitated a backchannel ceasefire between India and Pakistan, though India outright rejected it.
Some political pundits speculate that PM Modi may seek to leverage this rapport to delay or soften the new tariff regime, possibly by pushing for a partial agreement ahead of Trump’s likely visit to a regional defence summit later this year, potentially under the Quad framework.
However, New Delhi is unlikely to make concessions on politically sensitive sectors.
US demands for greater market access to agriculture, dairy, and genetically modified crops remain red lines for India.
Opening these sectors could trigger backlash from domestic constituencies ahead of several key state elections.
India may choose a calibrated response, accepting short-term tariff plans while continuing negotiations, betting on either a diplomatic breakthrough or the possibility that the Trump administration could recalibrate its approach under pressure from the influential Indian diaspora, these American businesses rely on Indian supply chains.
Ultimately, whether the tariff threats morph into a full-blown trade standoff or evolve into a last-minute deal may hinge less on policy and more on personality, the personal dynamics between President Trump and Prime Minister Modi.
For now, the ball is in New Delhi’s court.
‘Govt will protect welfare of farmers, entrepreneurs, MSMEs’
Meanwhile, the Ministry of Commerce and Industry reacted to the development, saying, “The government has taken note of a statement by the US President on bilateral trade. The government is studying its implications. 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. We remain committed to that objective. The government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs. The government will take all steps necessary to secure our national interest, as has been the case with other trade agreements, including the latest Comprehensive Economic and Trade Agreement with the UK."
