US Slaps 50 Percent Tariffs on Indian Exports Amid Trade Tensions Threatening Bilateral Relations and Economic Stability
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US Slaps 50 Percent Tariffs on Indian Exports Amid Trade Tensions Threatening Bilateral Relations and Economic Stability
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As of August 27, 2025, Indian goods entering the United States now face a baseline tariff of 50 percent, after President Trump ordered an additional 25 percent “secondary tariff” as a penalty for India’s continued purchase of Russian oil. This sharp hike follows earlier reciprocal trade measures and places India among the countries with the highest US tariff rates in the world, drawing India’s total above that of many so-called adversaries. The US is India’s largest export market, so these tariffs have wide-reaching implications for major sectors like textiles, jewelry, pharmaceuticals, and IT services.
According to India’s Chief Economic Adviser V. Anantha Nageswaran, these punitive tariffs could trim India’s GDP by about 0.5 to 0.6 percent this year. Labor-intensive exporters face the steepest challenges, especially as the tariff hikes threaten to make Indian products uncompetitive compared to rivals from Vietnam and Bangladesh. However, India’s finance leaders remain cautiously optimistic, banking on recent GST and tax cuts, still-low inflation, and strong central bank payouts to help counterbalance the negative trade shock.
In response to the US moves, India rolled out a sweeping reduction in GST rates on hundreds of goods in early September, aimed at supporting domestic consumption and insulating the economy from the tariffs’ worst effects. The economic standoff is fueling diplomatic tensions as well. Indian officials have so far resisted retaliatory tariffs, with Prime Minister Modi’s team emphasizing the need to protect domestic farmers and energy security, even as US officials demand that India scale back trade with Russia and open its markets further to American products.
The dispute has also prompted sharper language from political leaders and experts. Journalist Fareed Zakaria and former US Ambassador to India Kenneth Juster have called the tariffs a historic setback in US-India relations, warning they will raise costs for US consumers and complicate efforts to counter China’s influence. On Capitol Hill, Democrats on the House Foreign Affairs Committee labeled Trump’s tariffs as “harmful to Americans” and questioned why India, rather than China, was being targeted.
Meanwhile, all eyes are on the US Supreme Court, which is currently considering a landmark case that could sharply limit the president’s authority to impose tariffs under the International Emergency Economic Powers Act. If the court rules against Trump’s approach, some tariffs could be rescinded, providing potential relief for Indian exporters.
Listeners, these developments show just how pivotal—and unpredictable—the US-India tariff story has become. We’ll keep you updated as the global trade drama unfolds.
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