President Trump has announced a 25% tariff on goods imported from India, set to take effect on August 1, 2025. This decision arrives amidst ongoing trade discussions between the United States and India, which have yet to result in a finalized agreement.
Trump communicated his decision through a post on Truth Social, where he noted that despite the friendly relationship between the two countries, the U.S. has historically conducted relatively little business with India. He attributed this to India's high tariffs and what he described as "strenuous and obnoxious non-monetary Trade Barriers".
In addition to the baseline tariff, Trump stated that India would face a penalty for its continued purchase of military equipment and energy from Russia. He highlighted India's role as one of Russia's largest energy buyers, alongside China, at a time when international efforts are focused on isolating Moscow due to the conflict in Ukraine. Trump emphasized that these partnerships are "all things not good!".
This announcement follows earlier actions by the Trump administration regarding tariffs on India. In April 2025, President Trump announced new tariffs aimed at addressing foreign trade practices that he declared had created a "national emergency" due to large and persistent U.S. goods trade deficits. A baseline tariff of 10% was issued on most U.S. imports, with a higher tariff applied to some partners; the higher rate for India was initially set at 26%.
The U.S. and India are currently engaged in active negotiations on a Bilateral Trade Agreement (BTA). The aim of these discussions is to strengthen bilateral trade relations through enhanced market access, reduction of tariff and non-tariff barriers, and closer integration of supply chains. On July 1, 2025, during the Quad Foreign Ministers' Meeting in Washington, D.C., the External Affairs Minister referred to the ongoing BTA negotiations, with both sides affirming their commitment to an early conclusion of the first tranche of a mutually beneficial, multi-sector BTA.
India's perspective is that it should not be treated in this way by Washington. Despite these ongoing negotiations, the new tariff announcement introduces further complications to the trade relationship between the two countries.
In 2024, the U.S. goods trade with India totaled an estimated $129.2 billion. U.S. goods exports to India were $41.8 billion, an increase of 3.4 percent from 2023, while U.S. goods imports from India totaled $87.4 billion, up 4.5 percent from the previous year. The U.S. goods trade deficit with India was $45.7 billion in 2024, a 5.4 percent increase over 2023. India was the United States’ 10th-largest goods trade partner in 2024, accounting for 2.4% of U.S. trade, while the United States was India’s largest goods trade partner, representing 10.8% of India’s trade.
Some experts suggest that India's relatively low reliance on U.S. exports (2.2% of GDP) may cushion the impact, but industries are preparing for potentially higher costs and disrupted supply chains.
