Despite facing accusations of being a "tariff king" from US President Donald Trump, India has been actively working to reduce both tariff and non-tariff barriers. Recent data indicates that India's targeted tariff cuts, implemented in January 2025, are expected to benefit the United States the most, which undermines Trump's claims. However, amidst these efforts, the United States has imposed an additional 25% duty on Indian goods, raising the total tariff to 50% in response to India's continued purchase of Russian oil.
India's Ministry of External Affairs (MEA) has strongly responded to Trump's tariff threats, calling out the US and EU for "unjustified and unreasonable" criticism, highlighting their own trade with Russia. The MEA emphasized that India's energy procurement is vital for its national interest and pointed out the significantly larger trade volumes between Europe and Russia. External Affairs Minister S Jaishankar criticized the inherent double standards in singling out India, noting that the European Union's trade with Russia was $67.5 billion, and the United States also imports uranium, palladium, fertilizers, and other chemicals from Russia.
These developments occur against the backdrop of India's active engagement in Free Trade Agreement (FTA) negotiations with several countries. As of July 2025, India officially signed and formalized the India-UK FTA. India and the U.S. aim to double bilateral trade to US$500 billion by 2030. India has already signed and implemented more than a dozen FTAs with key partners, including Japan, Singapore, South Korea, the UAE, and Australia.
The recent increase in tariffs by the U.S. has led to concerns about its impact on Indian exports. The Federation of Indian Export Organisations (FIEO) has called the move "extremely shocking". Sectors like textiles, marine products, and leather, many of which are led by MSMEs, are expected to be hit the hardest. Experts estimate that the new tariffs could impact 40-50% of India's exports to the US. The proposed tariffs pose a threat to 87% of India's $66 billion exports to the US, particularly impacting the pharmaceuticals, automotive, and shrimp industries.
The Indian government is urging exporters to develop domestic brands and is considering measures like reduced testing fees for smaller exporters. The government is also exploring employment-linked programs and fixed-price intermediate products to support exporters. The commerce and industry ministry has requested sectors like marine food products to propose potential schemes linked to progressive employment, considering Ecuador's advantageous position with a 15% tariff on shrimp exports.
Despite the challenges posed by the increased tariffs, India remains committed to safeguarding its national interests and economic security. India is poised to deepen its strategic and defense partnership with Russia, a key ally and major supplier of oil. At the same time, New Delhi is signaling a pragmatic approach toward China, setting aside rivalries and border disputes to build a more cooperative relationship. India's policy of "strategic autonomy" remains its guiding principle, hedging between great powers without committing entirely to one.
President Trump's executive order includes a provision allowing modifications if other countries retaliate against the US or if affected nations take steps to align with the US on national security, foreign policy, and economic issues. This suggests a willingness to negotiate based on international responses and cooperation. The new tariff will come into effect in three weeks and will be in addition to a separate 25% duty that takes force on August 7. Exemptions remain in place for items already covered by sector-specific tariffs, including steel and aluminium, as well as potentially affected categories like pharmaceuticals. Goods are subject to existing or future Section 232 tariffs then the additional 25% tariff will not apply.
