Trump imposes a 25% tariff and extra levy on 'ally' India
In a significant move, former U.S. President Donald Trump announced a 25% tariff on Indian goods exported to the U.S., effective from August 1, 2025. This decision comes as U.S. and Indian negotiators are working to finalize a limited trade agreement.
The tariff, which also includes an additional unspecified penalty, is slightly lower than the previous 'reciprocal' tariffs of 26% briefly imposed in April during Trump's administration. The new tariff is aimed at addressing long-standing trade issues, particularly those centering on agricultural goods, where India uses high tariffs to protect millions of subsistence farmers.
The announcement has the potential to strain the US-India relationship, potentially undermining Washington's strategy to strengthen ties with India as a strategic counterweight to China. The tariffs are likely to provoke discontent among Indian nationalists, complicating the political landscape in India.
India, however, has reaffirmed its commitment to pursue a fair, balanced, and mutually beneficial bilateral trade agreement while safeguarding national interests. The Indian government is studying the tariff's implications, and discussions regarding dairy and agricultural imports between the U.S. and India have stalled.
Trump's latest move suggests increasing pressure on New Delhi to recalibrate its trade and geopolitical alignments ahead of the US presidential election. It's important to note that merchandise exports from India to the US surged 22.8% to $25.5 billion during the April-June quarter this fiscal year, and imports from India to the US rose 11.7% to $12.86 billion during the same period.
US Trade Representative Jamieson Greer acknowledged that more time is needed to assess India's willingness to open its market. Sources close to the US administration denied that formal conditions were placed on India in relation to the trade negotiations.
Trump's tariff on Indian goods, announced earlier, is still in effect as of August 1. The U.S. and India are still working towards a "mini-deal" aimed at reducing tariffs on key Indian exports like steel, aluminum, and auto parts, which could be signed by September or October. Trump hinted at a broader deal with India being coming soon.
[1] Source: Reuters, The Economic Times, The Washington Post, and The New York Times.
- The tariff announced by former U.S. President Donald Trump on Indian goods, effective August 1, 2025, is a part of ongoing politics on war-and-conflicts and policy-and-legislation, as it aims to address long-standing trade issues and potentially strains the US-India relationship.
- The increased pressure on New Delhi to recalibrate its trade and geopolitical alignments, due to Trump's tariff on Indian goods, is a topic of general-news, as it affects the future of US-India trade relations and could impact the global economic landscape.
