The United States has imposed steep tariffs on Indian exports, taking duties to an unprecedented 50 percent. The first wave of 25 percent levies began 1 August 2025, followed by an additional 25 percent on 7 August. The move marks a sharp turn in India–U.S. trade relations, reversing earlier plans to double bilateral trade to USD 500 billion.
The impact is immediate. Labour-intensive sectors like electronics, gems and jewellery face severe pressure. Industry bodies warn that electronics exports could lose USD 20–30 billion, while Mumbai’s jewellery hubs risk losing market share built over decades. Moody’s says the tariffs could slow India’s growth, cutting FY26 GDP by up to 60 basis points.
While some analysts forecast a manageable hit—PHDCCI estimates only USD 8.1 billion of exports affected—banks like SBI suggest the U.S. economy may feel stronger pain. Higher import costs could squeeze American consumers and manufacturers, especially in electronics and retail.
Political reactions in India have been defiant. The Prime Minister pledged to protect farmers, fishers and small-scale producers. Opposition leaders, usually divided, have backed a united front. Yet trade talks are now frozen, with Washington signalling no negotiations until tariffs are withdrawn. Risk of a deeper trade war looms.
The tariffs appear driven as much by politics as by economics. Washington has voiced frustration over India’s Russian oil purchases and widening trade gap. But targeting a strategic partner with such blunt measures risks eroding trust built over years of cooperation in defence, technology and energy.
India is expected to accelerate its Make in India push, diversify export markets and strengthen BRICS ties. Global players like Apple, Google and Tesla, already investing in local manufacturing, may cushion the shock through supply-chain shifts. Whether that offsets the long-term damage depends on how quickly the two nations find a way back to the negotiating table.
