As of August 27, 2025, the United States has begun enforcing tariffs of up to 50% on goods imported from India, a move that analysts are calling "akin to a trade embargo". This action, initiated by President Donald Trump, is intended to penalize India for its continued imports of Russian oil and defense equipment. The tariff hike doubles the existing 25% duties already levied on Indian goods. The U.S. Department of Homeland Security confirmed that all Indian goods "entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 am EDT on August 27, 2025” (9:31 am IST) will face the new 50% tariff.

India's Foreign Minister Subrahmanyam Jaishankar has defended the country's oil imports as stabilizing for global energy markets, also pointing out that Western countries purchase refined products made in India from Russian crude. However, U.S. officials, including White House trade advisor Peter Navarro and Treasury Secretary Scott Bessent, argue that India's purchases provide Moscow with crucial revenue that funds its war against Ukraine. Navarro accused India of "cozying up to both Russia and China".

The U.S. is India's top export destination, and the new tariffs are expected to significantly impact several sectors. Labor-intensive industries are likely to be the most affected. According to the Global Trade Research Initiative (GTRI), textiles, apparel, leather, gems & jewellery, and shrimp, worth approximately $60 billion, will now face these higher duties. GTRI estimates that shipments from these sectors could plummet by 70%, potentially causing mass unemployment and weakening India's position in global supply chains. Overall, GTRI estimates product exports to the US could fall to $49.6 billion this year from nearly $87 billion in 2024-25.

Economists anticipate major economic fallout from these tariffs. Estimates suggest that India's GDP growth could be reduced by 70–100 basis points, potentially falling below 6% this fiscal year. Capital Economics forecasts a 0.8 percentage point hit to growth for both this year and the next.

Several sectors are expected to bear the brunt of the tariffs. India is the sixth-largest exporter of textiles and apparel globally, accounting for roughly 4–4.1% of world exports in 2024. In 2024–25, the textile sector contributed $37.7 billion to India's merchandise exports. The US absorbs approximately 29% of Indian textile and apparel exports, roughly $10.3 billion. Analysts suggest that the new 50% tariffs could make Indian exports uncompetitive.

While approximately 30% of Indian exports to the U.S., mainly pharmaceuticals, electronics, and petroleum, will remain duty-free, about $3.4 billion in auto parts will continue to face the existing 25% duty. According to Commerce Ministry data, Indian merchandise exports worth USD 48.2 billion to the US will attract additional duties.

Competitor nations, such as Vietnam, Bangladesh, Cambodia, China, and Pakistan, may benefit from India's losses due to their lower tariff rates. Exporter groups predict that the tariff hikes could affect nearly 55% of India's $87 billion in merchandise exports to the U.S. Some U.S. customers have already stopped placing new orders.

Prime Minister Narendra Modi has declared that India will withstand the pressure and continue to build its strength. He promised reforms and a push for self-reliance. The government's Council is scheduled to convene on September 3–4, focusing on reducing tax levies on various goods and services.

Talks on a bilateral trade agreement (BTA) between India and the U.S. have faced uncertainty, and analysts suggest that a direct engagement between Prime Minister Modi and President Trump is needed to revive the deal.