US to Impose 25% Tariff and Penalty on All Indian Goods
US President Donald Trump announced a 25% tariff on all Indian imports, effective August 1, plus an unspecified penalty. He cited India's own high tariffs, non-monetary trade barriers, and its large-scale energy and military purchases from Russia as justification. The move escalates trade tensions and creates significant uncertainty for Indian exporters and the broader economy, coming as negotiations for a bilateral trade agreement appeared to stall ahead of a deadline.
Unpacked:
The US has criticized India for its high tariffs on American goods, non-monetary barriers such as complex regulations, and restrictions on market access. The US also objects to India's protectionist measures and its energy and military purchases from Russia, which Washington views as undermining US strategic interests.
US-India trade relations have oscillated between cooperation and conflict. While strategic defense ties have grown, economic disputes over tariffs, market access, and intellectual property have intensified. Notably, the US ended India’s preferential trade status under the Generalized System of Preferences in 2019, marking a shift toward a more competitive relationship.
The tariff could significantly harm Indian exporters reliant on US markets, increasing the cost of Indian goods and reducing their competitiveness. Sectors likely to be most affected include textiles, pharmaceuticals, and technology, leading to job losses and economic uncertainty in India.
India buys energy and military equipment from Russia due to historical defense ties, cost advantages, and diversification of suppliers. The US views these purchases as problematic, especially amid tensions with Russia, and uses them as a justification for tougher trade measures and diplomatic leverage.