India-US Trade Deal: US President Donald Trump on Wednesday announced 25% tariff for India which will go into effect from August 1. POTUS took to hsi social media platform, Truth Social announcing that India will also have to pay an additional penalty for purchasing oil and defence equipment from Russia.
“Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country,” Trump wrote on his social media platform.
Why Has Donald Trump Announced 25% Tariff on India?
Trump highlighted that India has bought a vast majority of military equipment from Russia as the later continue to engage in war with Ukraine. He also highlighted that US has a ‘massive trade deficit’ with India.
He added, “Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!”
US President Donald Trump announces 25% tariffs on India starting August 1st.
Posts, “Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the… pic.twitter.com/eqVj981lGD
— ANI (@ANI) July 30, 2025
The announcement follows after POTUS on Tuesday said that India may face tarifss between 20-25%. However, he had said while seaking aboard Air Force One that the decision was not final and called India India a “good friend” but repeated his criticism of what he sees as unfair trade practices.
“India has been a good friend, but India has charged basically more tariffs than almost any other country… You just can’t do that,” Trump was quoted as saying.
Also Read: Global Trade On Edge: China-US Talks End Without Tariff Deal Ahead Of August Deadline
How Will The New Trump Tariffs Affect India-US Trade?
India and the United States have maintained a growing economic and strategic partnership in recent years. Bilateral trade in goods reached approximately $129–130 billion in 2024, with India running a surplus of about $45–46 billion. This surplus is primarily driven by exports of pharmaceuticals, auto components, gemstones, and electrical equipment.
India has also been viewed as a key strategic ally for the US, especially in its Indo-Pacific strategy aimed at countering China’s influence. Successive US administrations have sought to deepen ties with New Delhi, both economically and in terms of defense cooperation.
Indian Exports Including Pharmaceuticals, Electronics, Gold To Be Hit With New Trump Tariffs
The new Trump tariff announcement will likely affect Indian trade. Buyers in the US have been holding off on placing new orders already as tariffs were expectd. Many Indian exporters rushed shipments earlier this year to beat possible tariff hikes, but orders for the critical Fall-Winter season, running from October to March, are now on hold.
India is also feeling the ripple effects of rising US tariffs on China also. As Chinese exports face new US duties, many Chinese manufacturers are rerouting their products to European markets at discounted rates. This has made it harder for Indian exporters to compete in Europe, further straining India’s foreign trade.
India’s major exports, including pharmaceuticals, auto parts, electronics, and gold, are at high risk under the new 25 percent tariff. The new rates would exceed the penalties faced by some of India’s larger trading partners like Japan and the European Union, as well as by smaller nations such as Indonesia and the Philippines.
Defence Products Likley To Suffer As Donald Trump Announces 25% Tarrifs on India
The United States has invested years in deepening defense and security cooperation with India. Trump is expected to attend a defense summit in India later this year, possibly referring to the Quad leaders’ summit. Some officials suggest a broader strategic agreement could take shape during that meeting.
Meanwhile, global corporations are moving supply chains out of China, and India is hoping to benefit from this shift. Companies like Apple and its suppliers have committed billions of dollars to scale up iPhone production in India.
However, the newly announced US tariffs could cause hesitation among foreign investors, potentially slowing India’s ambitions to become a major global manufacturing hub.
What Are Trump Tariffs?
Trump’s latest announcement is part of a broader tariff agenda. Earlier this year, he introduced a “world tariff” policy that would impose a 10–15 percent duty on imports from countries without bilateral trade agreements. He warned that tariffs could rise to 20 percent or more if trade negotiations remain stalled.
He has already enacted a 25 percent global duty on auto parts and hinted at future levies on pharmaceutical imports, which could further impact India.
This latest announcement of 25% tariffs, puts Indian exporters in a vulnerable position. Competing nations like Vietnam, Indonesia, and others in Asia may enjoy slightly lower tariffs, making Indian products less competitive in the US market.
Trade Negotiations Between India and US
When Indian Prime Minister Narendra Modi visited Washington shortly after Trump’s second-term inauguration, there was optimism that a fast-track deal could be reached. However, six months later, trade talks have not progressed significantly, and no relief from threatened US tariffs has materialized.
Despite the deadlock, India’s Commerce Minister Piyush Goyal had hinted that negotiators are “making fantastic progress,” according to a recent interview with Reuters. Nonetheless, key issues remain unresolved.
India has consistently protected its agriculture and dairy sectors and has refused US demands to allow imports of genetically modified soybeans and corn or to open its domestic dairy market to American producers. These sectors are politically sensitive in India, where small farms play a central role in rural livelihoods and food security.
New Delhi has been working on reducing tariffs in select sectors and addressing non-tariff barriers. However, these efforts have not been enough to postpone the looming August 1 deadline.
Behind the scenes, Indian negotiators have reportedly offered quota-based access for sensitive imports, similar to provisions in the UK-India trade agreement, which would expand market access over time. So far, that has not led to a breakthrough.
Also Read: Donald Trump Imposes 25% Tariff On India, Penalty for Russian Oil Purchase
