New Delhi / Washington D.C. — In a significant escalation of trade tensions, U.S. President Donald Trump on August 6 signed an executive order imposing an additional 25 % tariff on Indian goods, effectively doubling existing duties to a formidable 50 %, one of the highest levied on any U.S. trading partner.
The measure, justified under national security mechanisms such as the International Emergency Economic Powers Act, is a direct response to India’s continued purchase of Russian oil—and, according to Trump, undermines U.S. strategic goals amid the war in Ukraine.
The new tariffs, set to take effect 21 days after August 6 (around August 27), will impact approximately 55 % of India’s exports to the U.S., according to India’s Minister of State for Finance Pankaj Chaudhary. Sectors most at risk include textiles, footwear, gems and jewellery, and seafood.
Economic analysts warn the consequences could be severe. Goldman Sachs estimates a potential 0.6 percentage point reduction in India’s GDP growth, though it maintains a forecast of around 6.5 % for 2025. Similarly, Moody’s has cautioned that the tariffs threaten India’s export competitiveness, likening their impact to a trade embargo.
In addition to economic fallout, the move has delivered a diplomatic blow to U.S.–India relations, marking the most significant deterioration since Trump assumed office. India condemned the tariffs as “selective and unfair,” highlighting that other nations, such as China, continue similar Russian energy trade without facing comparable penalties. Former RBI Governor Raghuram Rajan criticized the U.S. strategy as high-handed—”like negotiating with a gun to your head”—and warned it hampers fair trade dialogue.
Amid the downturn, India is exploring softer responses, including reducing dependency on Russian oil and cautiously dialling down procurement talks with major U.S. defence contractors. However, no formal retaliatory measures have been adopted, indicating a desire to preserve strategic flexibility.
Sources: Reuters, AP News, Financial Times, Wall Street Journal, Reuters, Economic Times, Bloomberg
