US President Donald Trump’s decision to double tariffs on Indian imports — raising them to as high as 50% — came into effect on Wednesday, escalating tensions between Washington and New Delhi.
The new measures include a punitive 25% tariff on Indian goods linked to New Delhi’s continued purchases of Russian oil, on top of an earlier 25% levy. The combined duties now apply to a wide range of products including garments, gems and jewellery, footwear, sporting goods, furniture and chemicals.
“Products of India, except those set forth in section 3 of Executive Order 14329, that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on August 27, 2025, will be subject to the additional ad valorem rate of duty,” a US Department of Homeland Security order stated.
Exemptions for goods in transit
According to a US Customs and Border Protection notice, Indian goods already loaded and in transit before the midnight deadline can enter the US at the lower tariff rates if cleared before September 17, 2025. Exemptions also apply to certain steel, aluminium, copper, passenger vehicles and other items covered by separate tariff regimes.
Indian exporters face severe hit
The new tariffs threaten thousands of small exporters and jobs, particularly in Prime Minister Narendra Modi’s home state of Gujarat. An Indian Commerce Ministry official, speaking on condition of anonymity, said exporters affected by the hikes would be offered financial support and encouraged to diversify to other markets such as China, Latin America and the Middle East.
Trade groups estimate that nearly 55% of India’s $87 billion exports to the U.S. could be affected, potentially benefiting rivals such as Vietnam, Bangladesh and China.
Nisha Biswal, a partner at The Asia Group, warned that “the 50 per cent tariffs on India — now the highest of any US trading partner — will be hugely disruptive, pricing Indian textiles and garments out of the US market.”
She added: “US businesses have also lost the unprecedentedly low tariff rates that USTR had previously negotiated. The move also casts doubt on the China+1 strategy, creating uncertainty for companies that had shifted production to India.”
Blame game over failed talks
The tariff escalation follows five rounds of unsuccessful negotiations. Indian officials had hoped for a cap of 15 per cent tariffs, similar to concessions given to Japan, South Korea and the European Union.
But White House trade adviser Peter Navarro confirmed the higher rates would take effect, simply saying “Yeah” when asked if the decision stood.
Officials on both sides attributed the failure to “political misjudgment” and “missed signals.”
US Census Bureau data shows two-way trade at $129 billion in 2024, with a US trade deficit of $45.8 billion.
Mark Linscott, Senior Advisor at The Asia Group, called the outcome a “remarkable lose-lose.”
He added, “For the moment, the trade talks on reciprocal tariffs are on thin ice while the two sides stew over how to reach an understanding on Russian oil purchases. Hopefully, cooler heads who understand the value of the relationship will prevail.”
Modi: 'Pressure on us may increase, but we will bear it'
Just two days before the tariffs came into force, Prime Minister Modi stressed he would not compromise on domestic priorities.
“I can’t compromise on the interests of farmers, cattle-rearers, small-scale industries,” he said. “Pressure on us may increase, but we will bear it.”
Meanwhile, US Treasury Secretary Scott Bessent accused India of “profiteering” by reselling Russian oil, while India denounced the US tariffs as “unjustified and unreasonable.”
Security ties remain a balancing factor
Despite the trade clash, both governments sought to highlight their broader partnership.
The US State Department and India’s Ministry of External Affairs issued identical statements on Tuesday noting that senior officials had met virtually and expressed “eagerness to continue enhancing the breadth and depth of the bilateral relationship.”
They also reaffirmed commitment to the Quad alliance with Australia and Japan, underscoring shared concerns about China even as the trade rift deepens.
Basant Sanghera of The Asia Group warned that without direct engagement between Trump and Modi, “the trade relationship will remain in the doldrums, with risk of further damage.”