The US tariff on India was increased to 50% on August 27, 2025 impacting over half of India’s exports to the US. These additional India tariffs on US-bound goods target sectors like textiles, gems, jewellery, and leather, raising concerns about economic and diplomatic repercussions.
Key Highlights:
- Affected Sectors: Textiles, gems, jewelry, leather, marine, chemicals; 55% of USD 87B exports at risk.
- Exempted Sectors: Pharma, semiconductors, energy, critical minerals exempt, preserving supply chain roles.
- Economic Impact: Tariffs may cut GDP by 0.3-0.5%, USD 4-5B export drop, rupee risks.
- India’s Response: India condemns tariffs, seeks diplomacy, diversification, MSME support, no retaliation.
What are the US Tariffs on India?
The India tariffs on US exports refer to the 50% duties imposed by the US government on a wide range of Indian goods in 2025. Announced on August 6, 2025, and enforced from August 27, 2025, these tariffs were justified under Section 232 (National Security) and Section 301 (Unfair Trade Practices) of US trade laws.
They follow India’s continued Russian oil imports and expanding role within BRICS, making this both an economic and geopolitical move.
Overview of US-India Trade Relations
The United States and India maintain a strong and expanding trade partnership, with commerce between the two nations reaching record levels in recent years. Below are the key details of their trade relationship as of 2024–25:
- Bilateral goods trade between the two countries stood at around USD 129.2 billion in 2024.
- The US recorded a trade deficit of approximately USD 45.7 billion with India.
- India’s major exports to the US include pharmaceuticals, precious stones and jewellery, electrical machinery, and mechanical appliances.
- The US remains India’s largest goods trading partner, accounting for nearly 11% of India’s total trade.
- Both nations continue trade talks to reduce tariffs and enhance market access for key products such as spirits, motorcycles, and industrial machinery.
India’s Strategic Response to the US Tariff
In response, India has not announced any retaliatory tariffs on US goods yet but has reserved the right to act through WTO mechanisms. While India tariffs on US products remain unchanged as of October 2025, the government is assessing reciprocal options if trade talks fail.
- Diplomatic Engagement: Government remains committed to a fair bilateral trade agreement, with a fall 2025 deadline for negotiations.
- Sectoral Support: Commerce Minister PiyushGoyal has ruled out direct subsidies but proposed measures like interest subsidies, loan guarantees, and reduced certification fees for MSMEs.
- Market Diversification: Industry leaders like Anand Mahindra advocate exploring new markets to reduce US dependence.
- Domestic Resilience: PM NarendraModi has promoted local products to cushion global demand shocks.