Donald Trump has declared that the United States will not engage in further trade negotiations with India until the existing tariff dispute is resolved. This statement follows the U.S. administration's decision to double tariffs on Indian imports.
The tariff hike, implemented via an executive order, raises duties on Indian goods to 50%. The U.S. justifies this action by citing national security and foreign policy concerns, specifically India's continued import of Russian oil. The U.S. contends that these imports, whether direct or through intermediaries, pose an "unusual and extraordinary threat" to the United States, warranting emergency economic measures.
According to U.S. officials, the initial 25% tariff took effect on August 7, 2025. The additional 25% levy will be applied to all Indian goods entering U.S. ports in 21 days, with exceptions for goods already in transit and certain exempt categories.
India has strongly criticized the U.S. decision, calling the tariff hike "unfair, unjustified, and unreasonable". An unnamed Indian diplomat labeled the move "unilateral" and illogical. Despite the heightened tensions, India has affirmed that trade negotiations with the U.S. remain active. Dammu Ravi, Secretary of Economic Relations at the Ministry of External Affairs, expressed hope that the U.S. tariff decision would eventually be reversed through ongoing dialogue. He stated that India was close to finding a solution and that the current momentum has only been temporarily paused.
The U.S. State Department has maintained that "India is a strategic partner" and that the U.S. is engaging with India in "full and frank dialogue," even amidst the tariff dispute.
The tariff increase is expected to significantly impact key Indian exports such as textiles, leather, and seafood. Some experts believe the tariff hike is a pressure tactic by the U.S. ahead of ongoing negotiations for a bilateral trade agreement. Washington is reportedly seeking duty concessions on electric vehicles, dairy products, wines, petrochemical products, apples, tree nuts, and genetically-modified crops.
In the fiscal year 2024–25, bilateral trade between India and the U.S. reached $131.8 billion, with Indian exports accounting for $86.5 billion. Despite the current trade tensions, Ravi emphasized the strategic importance of the U.S.-India partnership, describing the two nations as "complementary partners" in trade.
Prior to this escalation, a U.S. team was scheduled to visit India on August 25 for the next round of negotiations for the proposed bilateral trade agreement. India and the U.S. had concluded the fifth round of talks in July in Washington.
Some analysts suggest that Trump's actions are aimed at securing trade concessions, particularly in agriculture, dairy, and pharmaceuticals – sectors India has traditionally protected. Others express concern that the dispute could strain the Quad alliance and potentially drive India closer to China and Russia.
Amidst the trade friction, both countries are reportedly continuing efforts toward a deal to accelerate bilateral trade, with the goal of doubling trade to $500 billion by 2030.
