U.S. Imposes 25% Tariff on Indian Goods

On 30th July, 2025, U.S. President Donald Trump announced a 25% tariff on goods imported from India effective August 1, and an additional penalty for India's continued defence and energy ties with Russia, potentially straining bilateral relations.

Key Points

Tariff Announcement: A 25% tariff will be imposed on Indian imports, higher than tariffs on Vietnam (20%), Indonesia (19%), Japan, and the EU (15%).
US Justification: U.S. President cited India’s high tariffs, non-monetary trade barriers, and defence and energy partnerships with Russia as key reasons.
Russia Factor: India remains Russia’s largest energy buyer and defence partner; Russian oil made up 35% of India’s supply in H1 2025.
Indian Response: The Indian government stated it is reviewing the implications of the move and remains committed to securing a fair, balanced trade agreement.
Trade Deficit & Impact:
- U.S. has a $45.7 billion trade deficit with India.
- Indian exports like textiles, furniture, pharmaceuticals, and gems may be hit.
Currency Market Reaction: The Indian rupee fell 0.4% to 87.80/USD in the non-deliverable forwards market. Gift Nifty futures dropped 0.6%.
Stalled Negotiations: The tariff move threatens to derail ongoing trade talks that aimed to expand bilateral trade to $500 billion by 2030.