As trade tensions escalate between the United States and India, a US official's recent remark has drawn attention amidst the ongoing tariff tussle. The US has imposed a hefty 50% tariff on most imports from India. This decision, which went into effect on Wednesday, August 27, 2025, comes as a punitive measure for India's continued purchase of discounted Russian oil. The White House argues that these purchases indirectly fund Russia's war against Ukraine.
The tariffs, confirmed by the US Homeland Security Department, risk inflicting significant damage on the Indian economy and further disrupting global supply chains. Economists predict a precipitous fall in trade between the two countries as a result. Goldman Sachs' chief India economist, Santanu Sengupta, warns that sustained 50% levies could push India's GDP growth below 6%.
US Treasury Secretary Scott Bessent highlighted the persistent deadlock in trade negotiations between the two nations. He stated that "we still don't have a deal," and characterized India's approach to the talks as "performative".
The increased tariffs are expected to significantly impact India's exports, particularly in sectors like textiles, gems and jewelry, carpets, and furniture. These labor-intensive industries face becoming unviable in the American market, potentially jeopardizing low-skilled jobs in India. The Federation of Indian Export Organisations (FIEO) reports that textile and apparel manufacturers have already halted production due to "worsening cost competitiveness".
While some key sectors like pharmaceuticals, energy products, and electronic goods have been spared from the sweeping duties for now, approximately 30% of India's exports to the US remain duty-free. However, sectors heavily reliant on the American market, such as textiles, gems and jewelry, and seafood, are bracing for shrinking order books.
The Indian government views the US's actions as "unfair, unjustified, and unreasonable". Prime Minister Narendra Modi has urged Indians to be "vocal for local" and support domestic products. The government is also exploring dedicated outreach programs in key markets to boost exports. Reserve Bank of India Governor Sanjay Malhotra has pledged the central bank's support for sectors adversely affected by the tariffs.
Despite the escalating trade tensions, India has kept the door open for negotiations with the US, emphasizing the protection of its farmers, small producers, and MSMEs as "red lines" in any potential trade deal. However, the current situation has led to a complex scenario that may reshape India's foreign policy, potentially strengthening ties with Russia, China, or other non-Western entities.
