Tensions between the United States and India escalated significantly as a sharp increase in US tariffs on Indian goods took effect. President Donald Trump’s administration doubled the duties to as high as 50% on a range of products, including garments, gems and jewellery, and footwear. This move, which imposes some of the highest tariff rates the US has on any country, places new strain on the strategic partnership between the world’s two largest democracies and is a direct punitive measure against India for its continued purchases of Russian oil.
The new tariffs layer a 25% penalty on top of existing 25% duties for many goods, effectively creating a major barrier for Indian exporters. The heightened costs threaten the livelihoods of thousands of small businesses and jobs within India’s export sector, with significant impact feared in key industrial areas like Prime Minister Narendra Modi’s home state of Gujarat. In a small relief, US Customs provided a three-week exemption for goods already in transit before the deadline, allowing them to enter at the older, lower rates until September 17.
Responding to the economic pressure, Indian officials have outlined a plan to support affected exporters. An anonymous Commerce Ministry official stated that the government will provide financial assistance and actively encourage businesses to diversify their export markets away from the US. The new strategy will focus on penetrating markets in China, Latin America, and the Middle East to build greater resilience against such external trade shocks.
The tariff dispute highlights a vast gap in the two nations’ trade policies. Indian trade officials point out that their average tariff on US imports is approximately 7.5%. In contrast, the US Trade Representative’s office emphasizes much higher Indian duties on specific categories, including rates of up to 100% on American automobiles and an average of 39% on US agricultural products. This discrepancy underscores the complex and often contentious nature of the bilateral trade relationship.
