Despite what he characterizes as a positive relationship with India, former U.S. President Donald Trump has repeatedly criticized the country's trade practices, particularly its tariffs on American goods. Trump has stated that India imposes "tremendous tariffs, about the highest in the world" while the U.S. allows Indian goods into its market without similar barriers. He has cited Harley Davidson motorcycles as an example of unfair trade, suggesting India's tariffs are a barrier to American companies.

In recent months, the Trump administration has imposed a series of tariffs on Indian goods. These include reciprocal tariffs of 25% and an additional 25% levy on oil imports linked to Russia, effectively pushing overall duties to 50%. Trump has accused India of fueling Russia's war against Ukraine through its purchases of Russian oil, though he has stopped short of imposing harsher sanctions directly on Russia.

Trump has also claimed that India has offered to reduce its tariffs on U.S. goods to zero. In a social media post, Trump stated, "They have now offered to cut their Tariffs to nothing, but it's getting late. They should have done so years ago". However, there has been no official confirmation from the Indian government regarding this offer. Trump has a history of making unfounded claims about other countries offering extravagant economic concessions to the U.S. amidst tariff threats.

These tariffs have strained U.S.-India relations, with New Delhi criticizing the levies as "unfair, unjustified, and unreasonable". Indian Commerce and Industry Minister Piyush Goyal has asserted that India will not "bow down" and will instead focus on capturing new markets. The Federation of Indian Export Organisations (FIEO) reported that textile and apparel manufacturers have already halted production due to "worsening cost competitiveness". The FIEO president, SC Ralhan, stated that Indian goods have become uncompetitive compared to those from China, Vietnam, Cambodia, the Philippines, and other Southeast and South Asian countries.

Despite the trade tensions, the U.S. and India are reportedly engaged in discussions regarding a Bilateral Trade Agreement (BTA). Commerce Minister Piyush Goyal has expressed hope that the agreement will be concluded, though he acknowledged that "a little bit of geopolitical" issues have delayed progress.

Meanwhile, Indian Prime Minister Narendra Modi has seemingly alluded to the tariff situation, stating that the Indian economy has been performing well despite "economic selfishness" in the world. India's economy experienced a 7.8% year-on-year expansion in the April-June quarter, which is the highest in five quarters before the U.S. tariffs were imposed.

Adding another layer to the situation, the U.S. Court of Appeals for the Federal Circuit has ruled that many of Trump's tariffs were illegal because he did not have the authority to impose them. While the court has allowed the levies to remain in place for now, Trump has the option to appeal the decision to the Supreme Court.