President Donald Trump announced on Wednesday that the United States will impose a 25% tariff on Indian goods from 1 August, citing longstanding trade imbalances and what he termed “obnoxious” non-monetary barriers.
The move follows weeks of stalled negotiations between Washington and New Delhi and raises the prospect of a broader trade confrontation between the two countries.
Writing on Truth Social, Trump said: “India has some of the highest tariffs in the world and the most strenuous and obnoxious non-monetary Trade Barriers of any country.” He added that India “has always bought a vast majority of their military equipment from Russia” and remains Moscow’s largest energy purchaser, even as the war in Ukraine continues.
“ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST,” he wrote.
In a separate post, Trump accused India of contributing to a “massive trade deficit” with the United States. According to U.S. trade data, the deficit stood at $45.7 billion in 2024, with Indian goods exports to the U.S. reaching approximately $87 billion, led by pharmaceuticals, textiles, petrochemicals, and jewellery.
Collapse of Trade Negotiations
The decision effectively ends months of trade negotiations aimed at securing a limited agreement before the end of 2025. According to officials close to the talks, discussions faltered over U.S. demands for greater access to India’s agricultural and dairy sectors. Washington had pushed for reductions in India’s steep tariffs on corn, wheat, soybeans, ethanol, and U.S. rice—on which duties range from 70% to 80%.
India, in turn, sought improved access for its labour-intensive exports, including garments, footwear, gems, handicrafts, and leather goods. New Delhi has historically resisted liberalising its agricultural market, citing the need to protect the livelihoods of millions of smallholder farmers. Indian officials also raised concerns about the lack of predictability in Trump’s trade policy and the absence of clear concessions from the U.S. side.
Negotiators had initially expected to finalise the first phase of a trade agreement by autumn 2025, with a view to increasing bilateral trade from $191 billion in 2024 to $500 billion by 2030. Trump’s latest announcement, however, derails those expectations.
High Tariff Landscape
A White House fact sheet accompanying the announcement reiterated U.S. grievances over India’s tariff regime. India applies an average Most Favoured Nation (MFN) tariff of 39% on agricultural goods—compared to 5% in the United States—with duties as high as 50% on certain imports like apples, vegetable oils, and corn.
U.S. exports to India, worth nearly $42 billion in 2024, include machinery, electronics, chemicals, and energy products such as liquefied natural gas and crude oil. These are now expected to be at risk of retaliatory measures. India already imposes tariffs of 15–20% on transport equipment and footwear and up to 68% on select food imports.
Beyond tariffs, the U.S. administration has also called for regulatory reforms in India covering patent protection, digital services, data localisation, and non-tariff barriers in pharmaceuticals and medical devices.
Strategic and Political Dimensions
Trump’s statement links the trade measures to India’s defence and energy ties with Russia. The U.S. president has warned of broader penalties against countries purchasing Russian energy if Moscow does not halt military operations in Ukraine within ten days. Indian officials have not responded publicly to this aspect of the announcement but have previously defended their strategic autonomy and energy security policies.
Trump’s claim earlier this year that he had helped broker a ceasefire between India and Pakistan has further complicated the bilateral atmosphere. Indian officials are said to have viewed the remarks as diplomatically unhelpful and indicative of a perceived tilt towards Islamabad.
Outlook
The tariffs come into effect on 1 August and are expected to have significant implications for Indian exporters, particularly in sectors reliant on U.S. markets such as garments, pharmaceuticals, and petrochemicals. While India has not yet announced any retaliatory measures, officials have indicated that they are reviewing options.
Despite the setback, Indian commerce ministry sources continue to express hope for a negotiated resolution. They cite India’s longstanding strategic alignment with the U.S. on regional security issues, especially regarding China, and the deepening of technology and investment ties.
However, with Trump’s trade strategy now firmly centred on unilateral tariff action and conditional market access, the scope for compromise appears limited in the short term. The new measures mark a shift in U.S. trade posture and could define the trajectory of India–U.S. economic relations for the remainder of Trump’s term.
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